The Smartest Stocks to Buy With $20 Right Now and Hold Forever

TSX stocks such as Neighbourly Pharmacy and Well Health offer significant upside potential to long-term investors.

Aditya Raghunath

Aditya Raghunath joined the Motley Fool Canada team in 2019 and has close to seven years of experience in covering publicly-listed companies. With a post-graduate degree in finance, Aditya aims to educate and engage Canadians by writing extensively about growth, dividend, and value stocks. If you are considering investing in the stock market, he recommends reading The Intelligent Investor by Benjamin Graham before taking the plunge.

Published July 24, 2023 3:45 pm EDT

The market selloff experienced in 2022 meant several stocks were trading at less than $20 per share. Investors were worried about the double whammy of rising interest rates and inflation, which dragged the valuations of companies significantly lower.

But investors should understand that every bear market cycle ends, making every major selloff a buying opportunity for long-term investors. Here are the best TSX stocks you can buy for just $20.

Well Health stock

A company operating in the health-tech space, WELL Health (TSX: WELL) is valued at a market cap of $1.1 billion. The TSX stock has already generated massive wealth for shareholders and is up 4,500% since its IPO (initial public offering) in April 2016.

WELL Health aims to power healthcare providers with the best-in-class digital healthcare tools and services that lead to improved patient care outcomes. Its omnichannel patient services are delivered at scale via a network of primary, secondary, specialized, and integrated care facilities. The company also operates the largest outpatient medical clinic network in Canada.

WELL Health expects to end 2023 with sales of $737 million, an increase of 29.5% year over year. So, priced at less than 1.8 times forward sales, WELL stock is attractively valued at current multiples. Analysts remain bullish on Well Health stock and expect shares to rise 90% in the next 12 months.

Dentalcorp stock

Dentalcorp (TSX: DNTL) acquires and partners with dental practices in Canada and is valued at a market cap of $1.4 billion. In the last 12 months, Dentalcorp has increased sales by 15% year over year to $1.4 billion while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) surged 11% to $260 million.

It acquired 55 new practices in the last 12 months, establishing its position as the largest dental care provider in Canada. While still unprofitable, Dentalcorp is forecast to end 2024 with adjusted earnings of $0.25 per share. Comparatively, analysts expect sales to touch $1.6 billion by 2024.

So, DNTL stock is priced at 0.9 times 2024 sales and 30 times forward earnings, which is reasonable for a growth company. It also trades at a discount of 81% to consensus price target estimates.

Neighbourly Pharmacy stock

The final TSX stock on my list is Neighbourly (TSX: NBLY) which is Canada’s largest and fastest-growing network of community pharmacies. The company has successfully expanded its national footprint over the years to include 170 locations across the country, allowing it to end 2023 (ended in March) with sales of $750 million.

Neighbourly Pharmacy operates in a highly fragmented market. For instance, around 60% of the 11,500 pharmacies in Canada are independent. Moreover, 3,500 of these pharmacies are potential acquisition targets. Neighbourly Pharmacy is targeting between 35 and 40 acquisitions in fiscal 2024, allowing it to increase sales by 23.8% to $927.36 million.

Priced at 0.7 times forward sales and 30 times forward earnings, NBLY stock is an absolute steal at its current valuation. Due to its consistent profits, Neighbourly Pharmacy also pays shareholders an annual dividend of $0.18 per share, indicating a forward yield of 1.2%.

Analysts expect NBLY stock to surge by 70% in the next 12 months.