Value investing is a popular strategy, as buying companies trading below their intrinsic value can result in outsized gains over time. A volatile stock market allows you to buy shares of several companies across sectors that are trading at a discount.
Here are three such cheap Canadian stocks you can buy under $50 right now.
Aritzia stock
A vertically integrated fashion design house, Aritzia (TSX: ATZ) is valued at a market cap of $3.8 billion. Shares of the retail giant are priced at $35.2, which is 41% below all-time highs. Despite a challenging macro-environment, Aritzia increased sales by 47% to $2.2 billion in fiscal 2023 (ended in February). Its sales south of the border were up 66% and now account for more than 50% of total revenue.
E-commerce sales grew 36.4% in fiscal 2023, up from 32.5% in the year-ago period, comprising 35% of net revenue. The company opened eight new boutiques and repositioned five new boutiques in fiscal 2023 in premier real estate locations. Aritzia emphasized the payback periods of these stores are well ahead of initial estimates.
Analysts tracking ATZ stock expect revenue to grow by 9.2% to $2.4 billion in fiscal 2024, indicating it’s priced at 1.3 times forward sales. While profit margins are forecast to remain under pressure in the near term, it’s estimated to grow by 35% between fiscal 2025 and fiscal 2028. Priced at 14.4 times 2025 earnings, ATZ stock is trading at a discount of over 40% to consensus price target estimates.
Martinrea International stock
Valued at a market cap of $942 million, shares of Martinrea International (TSX: MRE) are priced at $11.72. The company designs, manufactures, and sells metal parts, fluid management systems, aluminum products, assemblies, and modules to the automotive industry in North America, Europe, and other international markets.
The TSX stock is forecast to increase sales from $4.8 billion in 2022 to $5.2 billion in 2024. Adjusted earnings are estimated to grow from $1.76 per share to $2.72 per share in this period. So, it’s priced at 0.18 forward sales and 4.3 times forward earnings, which is very cheap.
Martinrea expects the economy to improve in the second half of 2023, which should result in higher production volumes, margins, and free cash flows for the company.
The TSX stock is priced at a discount of 61% to analyst price targets.
Dentalcorp stock
The final cheap TSX stock on my list is Dentalcorp (TSX: DNTL). Down 63% from all-time highs, Dentalcorp shares are trading at $6.68. One of Canada’s largest and fastest-growing networks of dental practices, Dentalcorp is valued at a market cap of $1.3 billion.
In Q1 of 2023, it grew sales by $358.3 million as the company acquired six more practices in the quarter. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 31% to $65.6 million, indicating a margin of 18.3%.
Dentalcorp is forecast to end 2023 with $1.4 billion in revenue, which means it’s priced at 0.90 times forward sales. Analysts remain bullish on DNTL stock and expect it to surge 104% in the next 12 months.
