TFSA (Tax-Free Savings Account) investors should focus on areas of the stock market where there’s value to be found. Undoubtedly, it may seem like value is few and far between on the S&P 500 after the strong year-to-date surge.
Despite the hot run, many “value” plays have yet to join tech and other artificial intelligence (AI) names in the party. And though the punch bowl could be taken away from the highest flyers within the tech scene at some point over the coming weeks and months, I’d argue that any such damage is likelier to be concentrated and isolated within the sector.
In this piece, we’ll narrow in on two Canadian stocks that I believe to be undervalued and ready to make up for lost time should Mr. Market be more willing to give non-tech and non-AI names a bit of room to rally to the upside.
TFSA investing 101: Go to where the value is!
Sure, the following value stocks won’t be on the radar of those rushing to punch their ticket to the “AI show” before the doors close. Regardless, I still think there are gains to be had in some of the most unloved corners of this market.
Remember, just because the broader market is up big of late does not mean you need to sit on the sidelines and wait for the next inevitable correction. While corrections tend to happen every year or so, they may not happen in the timeframe you expect.
Further, punishment dealt from corrections does not tend to be even. Oftentimes, the hottest stocks are among the quickest to cool off.
Without further ado, consider Jamieson Wellness (TSX: JWEL) and Brookfield Corp. (TSX: BN), two great stocks that new TFSA investors may wish to consider if they’re unwilling to show up late to the magnificent AI rally.
Cheap TSX stock #1: Jamieson Wellness
Jamieson Wellness isn’t exactly the type of stock that’s made headlines. It’s a vitamin and supplement maker that’s been around for more than a century. It was only a few years ago that the firm went live on the TSX Index. Jamieson is a powerful name in the world of health and wellness supplements. And as it looks to grow outside Canada, I think it can replicate the success it had at home as it heads abroad.
At around $30 and change, JWEL stock goes for 25.8 times trailing price to earnings (or 18.5 times forward price to earnings). It’s not quite a dirt-cheap stock. However, with a robust 2.25% dividend yield, a time-tested brand, and a long international growth runway, I’d be willing to pay an even higher multiple.
For now, shares are off around 30% from their highs. With minimal catalysts in sight and a recession to deal with, Jamieson seems like a rather untimely, albeit potentially compelling contrarian pick for any growth-focused TFSA portfolio.
Cheap TSX stock #2: Brookfield Corp.
Brookfield Corp. stock is a great value for investors who really want to set and forget. Though it’s been a rather choppy ride of late (1.58 beta, implying more volatility than the TSX), I think those who brave the ups and downs will be rewarded in the long run. The company offers ample exposure to high-calibre alternative assets that are capable of generating big cash flow through good times and recessionary times.
Indeed, the “Brookfield” name itself makes BN stock worth watching closely anytime the bear market is in the driver’s seat. In due time, Brookfield will get back on its feet, and once it does, dip buyers could be rewarded with solid results.
Remember, you’re not just investing in just any asset manager; you’re investing in one of the best names in the space.
