Canadian markets have encountered considerable volatility since the spring season. On Thursday, July 6, the S&P/TSX Composite Index suffered a near-300-point retreat. Volatility is never easy to stomach for investors, but Canadians should see this period as an opportunity to snatch up dirt-cheap stocks in the early summer season. Today, I want to zero-in on four of my favourite undervalued TSX stocks.
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This dirt-cheap stock offers a rock-solid dividend
North West Company (TSX: NWC) is a Winnipeg-based company that is engaged in the retail of food and everyday products and services to rural communities and urban neighbourhood markets in Northern Canada, rural Alaska, the South Pacific, and the Caribbean. Shares of this dirt-cheap stock have dropped 10% month over month as of close on July 6. The stock is now down 14% in 2023.
This company released its first quarter fiscal 2023 earnings on June 7. North West delivered sales growth of 7.5% year over year to $593 million on the back of gains in its Canadian operations and the positive impact of foreign exchange. It posted adjusted net earnings of $26 million – down from $31.1 million in the first quarter of fiscal 2022.
Shares of this dirt-cheap stock currently possess a favourable price-to-earnings ratio of 12. Meanwhile, North West offers a quarterly dividend of $0.38 per share. That represents a very solid 4.9% yield.
Here’s an undervalued dividend stock that is worth snatching up in early July 2023
Canadians can seek out value and exposure to the renewable energy space with Northland Power (TSX: NPI). This Toronto-based company is an independent power producer that develops, builds, owns, and operates clean and green power projects in North America, Europe, Latin America, and Asia. Its shares have plunged 28% in the year-to-date period.
In the first quarter of fiscal 2023, Northland Power saw sales fall to $622 million compared to $695 million in the first quarter of fiscal 2022. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Northland Power reported adjusted EBITDA of $352 million in Q1 2023 – down from $420 million in the prior year.
This stock currently offers a very attractive P/E ratio of 9.8. Moreover, Northland Power offers a monthly dividend of $0.10 per share, which represents a 4.4% yield.
A dirt-cheap stock that qualifies as a dividend aristocrat
Saputo (TSX: SAP) is a Montreal-based company that produces, markets, and distributes dairy products in Canada, the United States, Argentina, Australia, and the United Kingdom. Indeed, Saputo is one of the largest dairy processors on the planet. This cheap stock has achieved 25 consecutive years of dividend growth at the time of this writing. Shares of this cheap stock have dropped 16% in the year-to-date period.
The company revealed its fourth quarter and full year fiscal 2023 earnings on June 8. In Q4 2023, Saputo reported total revenue of $4.5 billion – up from $4 billion in the fourth quarter of fiscal 2022. Moreover, adjusted net earnings jumped to $196 million compared to $108 million in the prior year.
Saputo stock last had a favourable P/E ratio of 19. Moreover, it offers a quarterly dividend of $0.18 per share, representing a 2.5% yield.
Why I’m attracted to Primo Water in the summer of 2023
Primo Water (TSX: PRMW) is the fourth and final cheap stock I’d look to snatch up in the first half of July 2023. This Tampa-based company provides pure-play water solutions for residential and commercial customers. Its shares have plunged 20% so far in 2023.
In Q1 2023, the company beat expectations as revenue rose 4% year over year to $547 million. Meanwhile, adjusted net income was largely flat at $15 million, or $0.09 per share. Adjusted EBITDA climbed 8% to $95 million.
This cheap stock is trading in favourable value territory compared to Primo’s industry peers. Moreover, the stock offers a quarterly dividend of $0.08 per share. That represents a 2.5% yield.
