Value investing requires a lot of patience. Likewise, one needs the ability to buy TSX stocks when they are beaten up. It certainly is not for the faint of heart.
A lot of cheap stocks are cheap primarily because they are just bad businesses. However, in some cases, the market dismisses a stock because it is small, slightly complicated, or even boring. In other cases, a sector temporarily loses market appeal, and the stock market sells it based on macroeconomic worries rather than actual business fundamentals.
As a result, patient long-term investors can pick up great businesses at attractive prices. Here are three TSX stocks that look remarkably cheap today.
Brookfield: A top portfolio of assets at pennies on the dollar
Brookfield Corporation (TSX:BN) has not performed very well in the past couple of years. Over the past six months, it has fallen 5%. It has only delivered a -1% return over the past year.
Brookfield is an investment holding company with stakes in a mix of listed and private entities. These include a world-class alternative asset manager, renewable power, infrastructure, private equity, insurance, and real estate. It provides management services for these businesses and captures a steady stream of management fees and carried interest when projects mature.
With so many assets, it can be a complicated business to understand and value. With interest rates rising, the market has essentially marked the value of its high-end real estate to zero.
Today, investors get those assets for free at this price. The stock only trades for 12 times earnings, which is significantly below its five- and 10-year average of 17 and 24.
For a TSX stock with some great assets, a top management team, and opportunities to grow over the long term, Brookfield is a great bet for patient value investors.
goeasy: A TSX stock for value, income, and growth
goeasy (TSX:GSY) is another TSX stock that has been beaten up lately. Since late 2021, this stock has nearly been cut in half. Now, that doesn’t factor in that the stock is up 169% over the past five years. Yet, it hasn’t necessarily been a fun time for new investors.
Despite its poor performance, the company has been delivering strong results. It has grown earnings per share by a 30% compounded annual growth rate (CAGR) for the past three and five years.
goeasy is one of Canada’s largest non-prime lenders. It has been expanding its geographic reach and its product strategy across Canada.
Now, rising interest rates may be a headwind. So far, rising rates have not affected its growth or profitability. Right now, goeasy trades with a 3.2% dividend and a price-to-earnings (P/E) ratio of only 12. For income, value, and even growth, this is an attractive name.
Hammond Power: A top-performing TSX stock at a bargain value
Hammond Power Solutions (TSX:HPS.A) is a final TSX stock that looks very cheap. Unlike the other two stocks, it has demonstrated incredible stock momentum in the past few years. Its stock is up 269% in 2023 and 661% over the past five years.
Hammond manufactures specialized electrical transformer components for utilities, electric vehicle charging stations, industrial plants, and data centres. Electrification continues to be a very important long-term trend that could support Hammond’s growth.
Over the past three years, Hammond has grown earnings per share by a 58% CAGR. The company is cash rich and has more room to grow through internal investments and acquisitions. It only trades for 11.5 times earnings, which seems pretty reasonable given its growth profile.
