There are certain companies that most investors can’t go wrong with. While that’s certainly not the case with every blue-chip company even, there are a few that remain undervalued that investors should consider buying now.
In the case of these three undervalued stocks, each is incredibly different in what it can offer. One is at 52-week highs, yet analysts continue to believe it’s undervalued! Another is quite young on the TSX today, but again there is so much growth to come. So, let’s take a look at three undervalued stocks that belong in your portfolio right now.
Image source: Getty Images
Canadian Tire
Canadian Tire (TSX:CTC.A) is one for the ages. After over 100 years of becoming one of the most recognizable brands in Canada, the company remains quite strong. Even during the pandemic, Canadian Tire stock remained relatively strong. There was a large increase in its online offerings, and through supply-chain disruptions it managed to stay on top thanks to having storage on location.
The stock was doing quite well until April, when it announced earnings that fell below estimates. Yet after dropping 11% from 52-week highs, it’s been on the climb once more. Since that time, the company announced just on June 22 that it would be partnering with Microsoft in a “flagship strategic retail partnership.”
The seven-year partnership will use Microsoft Azure to “modernize its systems and infrastructure” and gain access to the cloud products and expertise. Given the diverse nature of the company’s business, it seems this could be a huge move. One that could see dividends increase even further, never mind shares. For now, the company trades at 16.4 times earnings and holds a 4.01% dividend yield for investors to consider.
Hydro One
Hydro One (TSX:H) hasn’t had the years on the market that Canadian Tire stock, but it’s still one of the top undervalued stocks I would consider right now. Again, in mid-April the stock started to drop, falling 10% since 52-week highs. And yet analysts believe this could be an excellent chance for long-term holders to hop in.
Hydro One stock missed analyst estimates last month, which sent shares down further. Yet analysts still marked them as strong, given that revenue increased, even though profit fell year over year. There is low earnings volatility, according to analysts, and a variety of long-term opportunities — some of which are already breaking ground, including the Chatham to Lakeshore transmission line this month.
There are now discussions around even more of these extensions and long-range transmission lines. That could be huge for investors in Hydro One stock, not just in Ontario but perhaps further. Furthermore, its 50/50 partnership with First Nations groups in Ontario leaves little in the ways of social and environmental hurdles. The stock currently trades at 21.6 times earnings, offering a 3.21% dividend yield as well.
CP stock
Finally, Canadian Pacific Kansas City (TSX:CP) is certainly one of the undervalued stocks I would consider for every portfolio these days. And that’s honestly because the share growth we’ve seen over the last decade could certainly repeat itself once more.
CP stock is an excellent option for Canadians wanting more growth, as the company’s recent acquisition of Kansas City Southern was approved this year, sending shares higher. Yet here’s the thing: the company hasn’t even started collecting revenue from the stock yet! Never mind making new partnerships and deals because of it among other railway companies.
Yet again, because CP stock missed earnings estimates recently, the company saw its share drop from 52-week highs. It’s now down 6% from those levels, though analysts think it won’t take long for the company to recover its share price. This is definitely a long-haul buy, as you can certainly look forward to more growth, as the company continues to expansion process. It currently trades at 25.6 times earnings, with a 0.74% dividend yield.
