As the stock market continues to face significant headwinds and volatility remains high, long-term investors have a major opportunity to buy some of the best value stocks in Canada while they trade dirt cheap.
History has shown that these market environments don’t last forever. It’s also shown these periods, when many high-quality stocks trade at discounts, are some of the best times to find long-term investments that you can buy and hold for years.
It’s essential, though, not just to look for stocks that are cheap but also high-quality businesses that can continue to weather the storm as well as consistently grow their earnings — especially after the market and economy eventually recover.
So, with that in mind, if you’re a long-term investor looking for some of the best opportunities to seize today, here are two of the top Canadian value stocks to consider adding to your portfolio while they are trading dirt cheap.
Cineplex is one of the best value stocks for long-term investors to buy now
Although there are many stocks that trade at compelling discounts in this environment, Cineplex (TSX:CGX) is one of the best to consider today, considering the potential it has to recover in the short run.
Like almost every other stock in Canada, both the economic and uncertain market environments are impacting the price of Cineplex’s shares. However, the main reason it trades so cheaply is that it never fully recovered from the pandemic.
Now that Cineplex is starting to see a significant recovery in its operations, though, 2023 could be the year that the stock earns investors significant returns.
In April, for example, Cineplex recorded over $61 million in box-office revenue, which was 96% of what it did in April 2019, before the pandemic hit. Furthermore, that was Cineplex’s second-best month ever since the start of the pandemic showing that with many new films being released this year, it has a tonne of potential to see a rapid and robust recovery in its operations.
With Cineplex trading at just $8.60 a share at the time of writing and with analysts expecting it will manage to generate normalized earnings per share (EPS) of $0.57 this year, Cineplex has a current forward price-to-earnings (P/E) ratio of just 15.1 times. Furthermore, the stock trades at just seven times its expected normalized EPS for 2024.
Therefore, the stock has significant potential to see a major rally by the end of the year, so while it’s dirt cheap and one of the best value stocks in Canada, it’s one of the top stocks that long-term investors can consider today.
This Canadian retail company is worth buying and holding for years
In addition to Cineplex, another high-quality value stock that long-term investors can consider in this highly opportune environment is Canadian Tire (TSX:CTC.A).
Canadian Tire is one of the best-known brands in Canada, and, in recent years, has shown that it has a tonne of long-term growth potential. More importantly, though, Canadian Tire has shown that it can constantly adapt to adverse market conditions and continue to find ways to weather the storm and continue to remain profitable.
The stock was a top performer through the pandemic, and, even now, with a weakening economic environment, Canadian Tire continues to perform exceptionally well.
There are many reasons for the success of Canadian Tire, including its ultra-popular loyalty program and the company’s ability to use data analytics to drive traffic in its stores. Furthermore, many of the acquisitions it’s made in recent years and the numerous retail banners it owns complement each other well, which continues to lead Canadian Tire to earn impressive results in its retail segment.
Plus, with the share price hovering around $173 a share, and the stock expected to report normalized EPS of $17.29 this year, it currently trades at a forward P/E ratio of just 10 times. In addition, since Canadian Tire constantly generates so much free cash flow, it also offers investors an attractive dividend yield of roughly 4%.
Therefore, if you’re a long-term investor looking for high-quality stocks that are cheap and that you can buy and hold for years, Canadian Tire is one of the top companies you’ll want to buy now.
