There are plenty of stocks out there on the TSX today trading at lows far below fair value. Yet, only a few trade at remarkably low prices compared to their overall value.
It can be difficult to identify truly cheap stocks, but today we’re going to look at a few metrics to help us find them. Looking at a company’s price-to-earnings (P/E) ratio, price-to-sales (P/S) ratio, and enterprise value compared to earnings before interest and taxes (EV/EBIT) can be a solid start to finding them.
TELUS
TELUS (TSX:T) stock is certainly a consideration if you’re looking at cheap stocks on the TSX today. It’s one of Canada’s largest telecommunications companies, providing products and services across the country. Nonetheless, TELUS stock has slumped further and further, down about 16% in the last year as of writing.
Part of this slide is from an impending merger between Rogers and Shaw, which could certainly bring problems for the stock. Despite this, investors should still consider it one of the cheap stocks that is now undervalued.
Telus stock currently holds a P/E ratio at 23.8, which isn’t exactly undervalued at this point. Yet its P/S ratio of 1.8 and EV/EBIT of 8.6 certainly indicate otherwise. Investors are currently paying $1.78 for every dollar of sales generated by the company, and that’s quite low. Further, investors continue to pay a reasonable amount per share compared to the stock’s profit, as well as its earnings. So this supports that there is certainly future value in a company with such a strong market position.
Yet another key point to note is that with updated guidance on the way, insiders increased their buying activity in the last few months. There were several large buys by executives, following sales over the last six months. What’s more, investors can currently bring in a dividend yield at 6.11%, which really is quite large compared to its average 4.59% yield over the last five years.
All taken into consideration, TELUS stock certainly looks like one of the cheap stocks to consider on the TSX today.
Manulife Financial
Now TELUS stock certainly had a strong foothold in the telecommunication sector. Manulife Financial (TSX:MFC) has an equally strong one in the finance and insurance sector. The company offers a broad range of insurance, investment, and wealth management products on an international scale. And yet, it remains one of the cheap stocks on the market right now.
This certainly has to do with rising interest rates. Higher rates usually mean far less people looking to renew or even create insurance or loans in the first place. This has led to lower production for Manulife stock.
Even so, it now remains a strong option for investors seeking out long-term returns. The stock is incredibly cheap as of writing, trading at a 5 P/E ratio, 2.2 P/S ratio, and 2.2 EV/EBIT ratio. These are all indications that investors don’t want to pay much for every dollar of earnings, sales, and profit. But that also makes it appealing, especially given its valuable, global, and diversified offerings.
Then there are the insiders to consider. There have been a multitude of large buys from insiders in the last six months, with very few sales. And while shares are still up by about 12.5% in the last year, they’ve fallen by about 3.5% in the last three months. So now is certainly a great time to jump in to catch a new wave of growth. All while collecting a 5.76% dividend that remains higher than the 4.82% five-year average.
