Don’t Overlook These TSX Stocks That Are Trading Below Their Fair Value

Canadian investors should look to snatch up undervalued TSX stocks like Nutrien Ltd (TSX:NTR) and others at the end of May.

Ambrose O'Callaghan

Ambrose O'Callaghan graduated with a BA in Political Science from McMaster University. After that, he jumped into the banking world. He worked from the front line to an investment associate role. After that, he found a way to marry his experience and knowledge in the world of banking and finance to his love and passion for writing. Ambrose is a passionate believer in Warren Buffett's value investing model.

Published May 22, 2023 3:15 pm EDT

The S&P/TSX Composite Index is positioned to finish the month in the red after suffering a series of setbacks over the past week. However, it still has time to mount a comeback before we move into the month of June. Today, I want to target three TSX stocks that look undervalued at the time of this writing. Let’s jump in.

This green energy TSX stock offers nice value and income in late May

Northland Power (TSX: NPI) is a Toronto-based independent power producer that develops, builds, owns, and operates clean and green power projects in North America, Europe, Latin America, and Asia. Shares of this TSX stock have dropped 11% month over month as of close on May 19. The stock is down 20% so far in 2023.

This company released its first-quarter fiscal 2023 earnings on May 9. It reported total sales of $622 million — down from $695 million in the first quarter of fiscal 2022. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell to $351 million compared to $420 million in the previous year.

This TSX stock currently possesses a favourable price-to-earnings (P/E) ratio of 10. The Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Northland Power last had an RSI of 34, which puts the stock just outside of technically oversold territory. Moreover, it offers a monthly dividend of $0.10 per share. That represents a 4% yield.

Don’t sleep on these dirt-cheap oil stock right now

Athabasca Oil (TSX: ATH) is a Calgary-based company that is engaged in the exploration, development, and production of light and thermal oil resource plays in the Western Canadian Sedimentary Basin in Alberta. This TSX stock has dropped 14% month over month as of close on May 19. Its shares are still up 29% in the year-to-date period.

Investors got to see this energy company’s first quarter fiscal 2023 earnings on May 10. Athabasca is maintaining annual production guidance of 34,500 to 36,000 barrels of oil equivalent per day (boe/d). Meanwhile, it posted operating income of $57 million in the first quarter of fiscal 2023.

Shares of this TSX stock last had a very attractive P/E ratio of 2.7. Moreover, the stock dipped into technically oversold territory in the middle of May. This TSX stock is trading in favourable territory compared to its industry peers, boasts an immaculate balance sheet, and is on track for strong earnings growth going forward.

One more undervalued TSX stock I’m buying before the summer

Nutrien (TSX: NTR) is the third and final TSX stock I’d look to snatch up on the dip in the waning weeks of May. This Saskatoon-based company provides crop inputs and services. Shares of this TSX stock have plunged 13% over the past month. The stock is down 14% so far in 2023. Nutrien stock saw a huge bump in the immediate aftermath of Russia’s invasion of Ukraine, as the war threatened global fertilizer and agricultural production.

This TSX stock possesses a very favourable P/E ratio of 4.8. Its shares last had an RSI of 34, which puts Nutrien just outside technically oversold levels. Nutrien also offers a quarterly distribution of $0.53 per share, which represents a 3.3% yield.