There are times when holding too much cash can be a drag on the performance of your portfolio. But in an environment where there is so much uncertainty in both the stock market and the economy, cash is king, and it gives investors the opportunity to buy stocks at ultra-low valuations.
Furthermore, because the market has been so volatile over the last year, it’s not just one or two sectors where stocks are trading ultra-cheap. In fact, investors have the opportunity to buy some of the best stocks across many sectors. So, if you’re looking to diversify your portfolio, now is an excellent opportunity to do so.
However, if you already have a well-balanced portfolio and are just looking for some of the top stocks to buy now, here are two trading at attractive discounts that are some of the best to buy in today’s environment.
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One of the most undervalued stocks to buy now
Many investors have been waiting for Air Canada (TSX: AC) stock to recover ever since its share price plummeted at the start of the pandemic. And although the travel sector has rebounded significantly over the last year, Air Canada has continued to face significant headwinds in recent quarters, as inflation has been sky high.
Now, however, with travel demand remaining robust but the pace of inflation beginning to fall, Air Canada has the potential to see a significant improvement in its margins, which many expect will allow Air Canada to return to profitability in the near term.
In 2022, for example, Air Canada saw its revenue jump by over 150% year over year to more than $16.5 billion. That was roughly 87% of the sales it did in 2019, prior to the pandemic. However, even with the significant recovery in revenue, with inflation causing its expenses to rise, Air Canada stock’s normalized earnings per share (EPS) for 2022 came in at a loss of $2.76.
Therefore, although the stock has seen a significant improvement in its operations, it continued to lose money for a third straight year.
This year, however, not only are its sales expected to exceed 2019 for the first time, but analysts also expect Air Canada stock will finally become profitable again, which could finally allow the stock to start rallying, which is why it’s one of the best stocks to buy today.
And although Air Canada trades at roughly 27 times its expected earnings this year, it only trades at 6.9 times its expected earnings in 2024.
Therefore, as long as Air Canada stock can continue to perform well and execute its recovery, the stock could finally see a meaningful rally this year, which is why Air Canada is one of the best stocks to buy now.
A top residential REIT trading well off its highs
In addition to Air Canada stock, another excellent investment to buy now while it’s still cheap is InterRent REIT (TSX: IIP.UN).
InterRent is one of the best stocks to buy now because, in addition to the fact that you can buy it while it’s still undervalued, InterRent has also been an impressive growth stock over the last few years.
The real estate investment trust is constantly looking at ways to grow its portfolio and increase the value of the investment for investors.
For example, over the last five years, its revenue has increased by an impressive 99%. In fact, going all the way back to 2010, the was only one year when its revenue grow by less than 10%.
Plus, on top of the growth in revenue, its adjusted funds from operations (AFFO) are constantly increasing each year, too.
Therefore, while InterRent trades at a forward price-to-AFFO ratio of less than 27.2 times, below its five-year average of 31.6 times, it’s one of the top stocks to buy now.
So, if you’ve been sitting on cash and looking for some of the top stocks in Canada to buy undervalued, InterRent’s current discount and long-term growth potential make it one of the best investments to consider today.
