These four TSX stocks are fundamentally stable, but because of heightened volatility, they aren’t keeping pace with the broader market thus far in 2023. RB Global Inc. (TSX: RBA), Canada Goose (TSX: GOOS), Northland Power (TSX: NPI), and TELUS International (TSX: TIXT) are underperformers year to date but look like great buys for value investors.
New growth platform
Ritchie Bros. Auctioneers, a leading auctioneer of commercial assets and vehicles, changed its corporate name to RB Global following its successful acquisition of U.S. auto retailer IAA. Its CEO, Ann Fandozzi, said, “The RB Global name signifies the transformation of our business into a premier global marketplace and more closely aligns with our strategy.”
According to Fandozzi, the $13.3 billion global asset management and disposition firm has been working to create a new growth platform that extends beyond auctions. She believes the IAA integration and collaborative platforms reinforce RBA’s compelling value-creation opportunities.
In Q1 2023, total revenue and gross transaction value (GTV) rose 30% and 32% to US$512.4 million and US$1.9 billion, respectively, versus Q1 2022. Its CFO, Eric Jacobs, said, “We remain confident in our ability to build on our combined momentum to deliver profitable growth as we integrate our businesses.” At $73.04 (-4.97% year to date), RBA pays a 1.98% dividend.
Brand strength
Canada Goose’s impressive Q4 and full-year fiscal 2023 financial results make it a strong buy. The $2.3 billion luxury apparel manufacturer also expects a stronger growth outlook in fiscal 2024 revenue and profitability metrics. The current share price is $21.80 (-9.47% year to date).
In the 12 months that ended April 2, 2023, revenue climbed 10.8% to $1.2 billion year over year. However, net income declined 27.1% to $68.9 million. Nevertheless, its Chairman and CEO, Dani Reiss, said Canada Goose would continue to build brand strength to generate profitable growth sustainable over the long term.
Clean and green
Canada’s first independent power producer with clean and green global power infrastructure assets is a no-brainer buy. Dividend-payer Northland Power is a steal at $29.76 per share (-18.9% year to date). You can buy on weakness and partake in the 4.03% dividend yield.
The $7.5 billion company produces electricity from clean-burning natural gas and renewable resources (solar and wind). Besides North America, it also operates in Latin America, Asia, and Europe. According to management, NPI is an energy transition growth story. Its capacity will grow from 3 gigawatts (GW) in 2023 to 12 GW by 2030.
Based on market analysts’ buy ratings and price forecasts, NPI’s return potential in 12 months is between 40.1% and 51.2%.
Solid revenue growth
TIXT deserves serious consideration due to its impressive US$686 million revenue in Q1 2023, a 14.5% jump from Q1 2022, notwithstanding macroeconomic challenges. The stock trades at a deep discount at $21.56 (-19.34% year to date). Market analysts have a 12-month average price target of $37.17, a 72.4% upside potential.
The $5.9 billion digital customer experience innovator has solid backing in TELUS Corp., one of Canada’s dominant telecom firms. With the acquisition of a full-service digital product provider (Willow Tree), TIXT expects revenue growth between 20% and 23% in 2023.
Shout out to bargain hunters
Bargain hunters can exploit the elevated market volatility by accumulating shares of any of the four value stocks in focus.
