3 Top Canadian Value Stocks in April 2023

Undervalued TSX stocks, such as GDI Integrated Facility Services, are trading at massive discounts to consensus price target estimates.

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After more than a decade of underperformance, value stocks are back on the radar of equity investors due to a weak macro environment. Typically, if a company’s share price is trading at a price lower than its intrinsic value, it is a value stock. Moreover, these stocks should have a strong financial record and report consistent profits and cash flows while trading at a reasonable multiple.

The stock market selloff that investors have experienced since the start of 2022 has dragged valuations of several companies across sectors significantly lower, providing investors an opportunity to buy the dip.

Here are three top Canadian value stocks you can consider buying in April 2023.

Calian Group stock

A well-diversified company, Calian Group (TSX:CGY) provides healthcare, communications, learning, and cybersecurity solutions. Valued at a market cap of $740 million, the TSX stock has increased sales from $343 million in fiscal 2019 to $582 million in fiscal 2022 (ended in September).

It ended fiscal 2022 with a gross margin of 29% and an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 11.3%. Calian also reported a revenue backlog of $1.3 billion in fiscal 2022, providing investors with revenue visibility.

In terms of valuation, Calian stock is priced at 1.2 times forward sales and 15.4 times forward earnings, which is very cheap. It also offers shareholders an annual dividend of $1.12 per share, translating to a forward yield of 1.7%. These payouts have risen by 5.8% annually in the last 15 years.

Calian stock is currently trading at a discount of 30% to consensus price target estimates.

Total Energy Services stock

A company operating in the energy sector, Total Energy Services (TSX:TOT) offers its portfolio of products and services to oil and gas players in North America and Australia. It provides services related to contract drilling, rentals & transportation, well servicing, and compression.

Higher oil prices allowed Total Energy Services to increase revenue by 76% year over year to $759.8 million in 2022. Its operating income last year stood at $49.3 million compared to an operating loss of $1.4 million in 2021.

Down 14% from its 52-week highs, Total Energy stock is priced at 0.4 times forward sales and six times earnings. It also pays investors a tasty dividend yield of 3.8%. TOT stock is currently priced at a discount of 76% to consensus price target estimates.

GDI Integrated Facility stock

The final TSX value stock on my list is GDI Integrated Facilities (TSX:GDI), a company valued at a market cap of $1.05 billion. It operates in the outsourced facility services industry, providing low-cost solutions to its base of enterprise clients.

Despite an economic slowdown, GDI increased its sales in the fourth quarter of 2022 by 36% year over year to $588 million. Comparatively, its adjusted EBITDA surged by 21% in the quarter to $41 million.

Priced at 0.4 times forward sales and 30 times forward earnings, GDI stock is trading at a discount of almost 40% to consensus price target estimates. In the last five years, GDI has increased earnings at an annual rate of 36%, which has driven its share price higher by 170% since April 2018.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Gdi Integrated Facility Services and Total Energy Services. The Motley Fool recommends Calian Group. The Motley Fool has a disclosure policy.

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