The TSX stocks I’m about to discuss are a bit controversial, to be sure. The market is down, but these three have fallen even further. Now, long-term investors looking to add perhaps a bit of risk to their portfolio for potential huge gains, have a bargain on their hands.
So today, let’s look at these undervalued TSX stocks that remain well in oversold territory in May 2023.
Dye & Durham
Dye & Durham (TSX: DND) shares have been on a bit of a rollercoaster this year, climbing up and down but remaining far down as of writing. Shares of DND stock are down about 32% in the last year, and it now trades in oversold territory at a 20 on the relative strength index (RSI). Honestly, this decline comes down events of the last few months, with a lot going on for DND stock.
A $200-million class-action lawsuit continues to be underway against DND stock, resulting from price hikes back in 2021 and 2022. Plaintiffs argue there was a price freeze, so DND went against the terms of its contract.
But it looks like DND stock will come out on top, in the case of one judge who stated there was “no real evidence” the plaintiffs lost business. Now, these plaintiffs may end up footing the bill for legal fees. That’s not to say they’re out of the woods. DND stock does seem to grab much of the legal software provider market, only to hike fees. Even so, shares are well below fair value, trading at 1.4 times book value. So it could be a good time to pick up the stock if you’re in for the long haul.
Celestica
Celestica (TSX: CLS) also remains in a precarious position, though definitely a more positive one. The company is slated to “sector perform” in 2023, based on recent earnings coming out. However, it did manage to come out ahead of earnings estimates in the first quarter.
Revenue came in at $1.8 billion, up 17% over the first quarter of 2022. The supply-chain solution company also saw adjusted earnings per share (EPS) rise over last year, with adjusted return on invested capital (ROIC) at 17.9% compared to 13.9% the year before.
While analysts weren’t exactly recommending Celestica stock to everyone and their mothers, it certainly remains well under value. It currently holds an RSI at 28, as of writing, with shares up 5.7% in the last year, but down 5.2% year to-date. Mainly, while there are some slowdowns, the healthtech and industrial sector are offsetting those downturns. So this should certainly lead to more growth in 2023, slow as it may be.
Canopy Growth
Finally, Canopy Growth (TSX: WEED) continues to be on the watchlist of many. However, as Canopy Growth stock continues to fall past 52-week lows, it doesn’t seem as if the situation is getting any better. This has led the cannabis stock to continue well within oversold territory, with a current 24.87 RSI.
Shares of Canopy Growth stock are now down about 78% in the last year, as of writing. Yet even as shares remain down so far, analysts continue to believe there is enough on hand for Canopy Growth stock to double in the near future. A target price remains at about $3 as of writing.
The proof will be in the profits, and if United States cannabis legalization comes its way. That isn’t likely to happen in the next year or so, as another U.S. election is just around the corner in 2024. Yet if the company can focus on profits from its non-THC brands, there may just well be some growth in Canopy Growth stock yet.
