It has been another volatile year for TSX stocks. Who would have thought that inflation would abate while employment continues to be sky high? Who would have thought at the start of the year that we would see banking crisis in the U.S. and Europe?
The fact is, every investment year is full of surprises. Some investors flee and bury their money. Smart investors take advantage of the volatility and buy quality stocks while they trade cheaply.
This is not to say there won’t be more volatility. However, if your investment time frame is long enough, some of these discount priced stocks could really pay off over the long term. Here are three stocks that look remarkably cheap in this environment.
A quality TSX bank stock for a bargain
Toronto-Dominion Bank (TSX: TD) has fallen over 8% in 2023. It is down 21% over the past 52 weeks. With a market cap of $147 billion, it is the second-largest bank in Canada. It has one of the highest equity ratios in North America, which suggest that it is managed very conservatively.
The bank is also very diversified both geographically and by segment. Its operations are spread across retail, commercial, wholesale, wealth management, and insurance.
TD has significant exposure to the U.S., and the stock took a dive on contagion fears from the U.S. banking crisis. It appears the market has overreacted and shrewd investors could take advantage of these near-term fears.
Today, you can buy TD with a 4.8% dividend yield. That is significantly above its five-year average of 3.9%. With a forward price-to-earnings ratio of 8.8, this TSX stock has not been this cheap in nearly 10 years (other than the March 2020 crash).
A sale priced TSX real estate stock
Another income stock that looks like an incredible bargain is BSR Real Estate Investment Trust (TSX: HOM.U). This stock is listed on the TSX, but its portfolio of garden-style, multi-family properties are located completely in the southern United States.
This creates an attractive arbitrage opportunity. Since BSR is listed in Canada, it doesn’t get the same attention as other U.S.-listed apartment real estate investment trusts (REITs). Today, it trades at a near 40% discount to its net asset value (private market value).
Yet its high-quality properties are in some of the best growth markets in America. Last year, it grew its adjusted funds from operation (AFFO) per unit (a core REIT profitability metric) by 35%! It could grow by the high single digits in 2023.
With this TSX stock you get a 3.9% dividend yield, a top portfolio at a discount, and a REIT with a great balance sheet and growth ahead. It’s a perfect bargain for a patient income/growth/value investor.
An undervalued consumer stock
If you like share buybacks over income, you may want to consider buying BRP (TSX: DOO) today. BRP has grown to become a force in high-powered recreational vehicles like snowmobiles, ATVs, and watercraft. The company is incredibly innovative and continues to take market share and add new product categories.
Last year, it beat expectations and grew normalized earnings per share by over 20%! Now, this year’s outlook is a little more tepid given the current economic environment. However, this company tends to underpromise and overdeliver.
This TSX stock generates a lot of cash, and it has been very aggressive buying back stock. Its share count is down 25% since 2018! Today, this stock trades at eight times forward earnings, which looks like a bargain if you are a long-term investor.
