Stock market investing is difficult, especially when the market is volatile. You cannot know whether you will face losses if you invest in the stock market or get returns. When the situation is rocky, many investors stay on the sidelines and wait for a better opportunity to invest. Seasoned stock market investors look favourably at market downturns.
When share prices are down across the board, they can invest in high-quality stocks trading at deep discounts. As the market eventually recovers, the value of the stocks they invested in at discounts increases, growing their portfolio’s value. However, you cannot invest in just any stock trading at discounted share prices.
To unlock future wealth growth, identifying and investing in undervalued stocks is essential. Stocks trading below intrinsic or real values with strong underlying businesses are better bets for value-seeking investors. When the market recovers, or it enters a bull territory, valuations of these undervalued stocks can grow, delivering wealth growth through capital gains.
As of this writing, the S&P/TSX Composite Index is down by 7.39% from its 52-week high. The Canadian benchmark index suggests that the broader market is trading at discounted valuations. It might be the perfect time to pick up shares of undervalued stocks for long-term wealth growth. To this end, I will discuss two TSX stocks you can add to your self-directed portfolio.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a $1.11 billion market capitalization multichannel digital health technology company headquartered in Vancouver.
It is also the largest owner and operator of outpatient health clinics in Canada, operating several primary healthcare facilities in the country and the United States. As of this writing, WELL Health stock trades for $4.79 per share, reflecting a 70.46% year-to-date uptick in its share prices.
The strong start to 2023 is not surprising, considering its stellar results in the fourth quarter of fiscal 2022 and its full-year performance throughout the year. With total revenues 88% higher than fiscal 2021, it also saw a 154% boost to its Virtual Services revenue. Roughly 96% of its revenue came through recurring sources. It can be an excellent addition to your portfolio at current levels.
Rogers Sugar
Rogers Sugar (TSX: RSI) is another undervalued stock to consider adding to your portfolio. The $639.82 million market capitalization company is the largest refined sugar distributor in Canada. Producing a product that serves as an essential ingredient that will never run out of demand, Rogers Sugar is well positioned to be considered a resilient and defensive business.
Rogers Sugar has enjoyed a strong start to 2023. As of this writing, Rogers Sugar stock trades for $6.12 per share, up by 9.29% year to date. It also pays its shareholders at a juicy 5.88% dividend yield. Its fiscal 2023 began strongly due to trends established in 2022 driving stronger performance in the first quarter.
Rogers Sugar reported a 13.3% increase in its revenue and a 41% increase in its free cash flow year over year.
The company’s chief executive officer anticipates strong demand from the industrial sugar domestic market to sustain this year and growth for its maple segment. It might be a good time to invest in its shares to capitalize on what could be a strong year in 2023.
Foolish takeaway
Considering year-to-date performances, WELL Health Technologies stock and Rogers Sugar stock are already winners. However, both TSX stocks trade below their respective all-time highs. When the market stabilizes, WELL stock and RSI stock can deliver more returns. It might be the perfect time to add their shares to your portfolio.
