TFSA Investors: 3 Oversold Stocks That Should Be On Your Radar Right Now

Consider these three oversold stocks if you want undervalued stocks for your self-directed TFSA portfolio.

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The ongoing volatility has scared many stock market investors. Fearing the onset of a recession, many Canadians have started selling off their shares in the market. As of this writing, the S&P/TSX Composite Index is down by 5.5% from its January 2023 high and 11.7% from its 52-week high.

The collapse of several US banks prompted the latest sell-off. While a downturn understandably worries stock market investors, it allows savvier investors to buy shares of high-quality stocks at discounted prices. If you are looking for undervalued stocks you can add to your portfolio right now, there are several assets to consider. Today, we will look at three stocks that should be on your radar for this purpose.

Cocego Communications

Cocego Communications Inc. (TSX:CCA) is a $2.8 billion market capitalization company providing its residential and commercial customers with internet, video, and telephony services via broadband fiber networks.

While not a competitor to the biggest telecoms in the country, Cocego has strong operations in Canada and the US. Communications stocks are typically highly reliable stocks delivering solid revenue and earnings growth. The essential nature of their internet services makes them invaluable to consumers.

The stock has sold off significantly over the last year due to concerns about its business being impacted by macroeconomic issues. Considering that the stock has not seen a quarter of losses since 2016, it looks like a safe investment in terms of the business’ strength. As of this writing, CCA stock trades for $62.74 per share and boasts a juicy 4.95% dividend yield.

CI Financial

CI Financial Corp. (TSX:CIX) is Canada’s largest non-bank affiliated investment management firm by assets under management (AUM). Headquartered in Toronto, for the $2.4 billion market capitalization firm, 2022 was not a good year. While CIX began 2023 with a strong start, macroeconomic factors combined with the US banking issues pulled back its share prices again.

As of this writing, CI Financial stock trades for $12.72 per share. It is down by 26% from its February 2023 high and 38.3% from its 52-week high. Higher interest rates have also negatively impacted the private investment space, resulting in a 10% drop in its AUM in its latest quarter.

That said, the company is expanding its wealth management business across the border. The move can help it unlock more growth potential in the coming years.

Extendicare

Extendicare Inc. (TSX:EXE) is a $527 million for-profit long-term care provider offering seniors housing, care, and other related services. Headquartered in Markham, the company operates over 100 care facilities. It also offers consulting services and contracts with third parties. Given the nature of its services, Extendicare might not have much to worry about in terms of demand in the future.

Considering Canada’s aging population, occupancy in long-term care facilities will likely continue to increase. As of this writing, Extendicare stock trades for $6.22 per share and boasts a juicy 7.72% dividend yield. Down by 22.3% from its 52-week high, EXE can be worth keeping on your radar if you seek undervalued stocks for your portfolio.

Foolish takeaway

It is essential to remember that not all discounted stocks are undervalued. Granted, stock market investing is risky. Still, some stocks present more risks than others. To identify undervalued stocks, you must identify high-quality companies trading for lower than their intrinsic values.

If you make the right bets, a strong recovery can deliver stellar wealth growth through capital gains. Allocating space in your Tax-Free Savings Account (TFSA) to such investments can help you enjoy the returns on your investment without incurring taxes. While not without risks, Cocego Communications stock, CI Financial stock, and Extendicare stock can be excellent assets to consider for this purpose.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends CI Financial and Cogeco Communications. The Motley Fool has a disclosure policy.

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