Got $5,000? Buy and Hold These 3 Value Stocks for Years

The Bank of Montreal (TSX:BMO) is one value stock worth holding for years.

Andrew Button

Author Bio

Andrew “A.J.” Button is a financial writer with a longstanding interest in value investing and international markets. He began investing at a young age, building a portfolio of dividend stocks to help pay for university. After stepping away from investing for a time, he rediscovered his passion in 2019 when he began working as a freelance financial writer. Since then, Andrew has built a diversified investment approach spanning Canadian, U.S., and international equities, as well as guaranteed investment certificates (GICs) and money market funds. He is particularly interested in international stocks, drawn to their dividend potential and long-term growth opportunities, while maintaining an interest in Canadian businesses. Before joining The Motley Fool, Andrew worked as a freelance copywriter specializing in financial services. He continues to write for financial publications and share his thoughts on stocks through social media.

Education and Professional Credentials

Canadian Securities Course (CSC)
CFA Program Level I examination completed

Areas of Expertise

Value investing, Canadian equities, U.S. stocks, international equities, dividend investing, long-term investing, GICs, money market funds, and portfolio diversification.

Social Media Profiles

Published August 16, 2023 4:30 pm EDT

Do you have $5,000 to invest?

If you do, you may wish to invest the money in value stocks.

The universe of stocks contains many different types of equities: growth stocks, value stocks, and everything in between. There are good opportunities in almost every sector, but growth stocks are looking a little overheated right now. In this environment, it pays to take a long, hard look at value stocks. In this article, I will explore three value stocks that may be worth buying today.

money cash dividends — Image source: Getty Images

Suncor Energy

Suncor Energy Inc (TSX: SU) is a Canadian energy stock that has a 4.8% dividend yield at today’s prices. Going by the last 12 months’ earnings, it is truly dirt cheap, trading at 5.4 times earnings, 1 times sales, 1.4 times book value, and 4 times operating cash flow.

Suncor Energy has three main business activities:

Selling crude oil
Selling natural gas
Operating gas stations

All of these businesses are typically very profitable for Suncor. This year, earnings are going down, because the price of oil is going down, but that’s to be expected after oil hit $120 last year. That level obviously wasn’t going to last, so Suncor’s comparatively weak showing this year is understandable.

Taiwan Semiconductor

Taiwan Semiconductor Manufacturing (NYSE: TSM) is a Taiwanese tech company that manufactures computer chips. It is the biggest chip company in the world by far, doing over $62 billion a year in revenue.

Taiwan Semiconductor has an opportunity to make a lot of money off of artificial intelligence (AI). It is the contract manufacturer of NVIDIA, the world’s #1 AI chipmaker. NVIDIA is expected to grow its revenue by 64% year over year next quarter, and Taiwan Semiconductor will get a cut of the sales.

You might think, with all this AI hype, that Taiwan Semiconductor would be a mighty expensive stock. It’s not! At today’s prices, TSM trades at just:

15 times earnings
6.2 times sales
4.3 times book value
9.5 times operating cash flow

It’s a very impressive company, and a relatively inexpensive stock.

Bank of Montreal

The Bank of Montreal (TSX: BMO) is a Canadian bank stock with a 5% dividend yield. The bank is well known for its Canadian retail bank, as well as its large U.S. presence. BMO has a U.S. retail bank, as well as a U.S. investment banking segment. As a bank, it makes a lot of money when interest rates rise. Banking is one of the few industries that can make money off of interest rate hikes, as bankers are involved in lending money. So, BMO is one stock you might want to consider owning to combat the effects of rising interest rates.

Bank of Montreal’s most recent earnings release wasn’t its best ever. Revenue declined 19.8%, earnings declined 78%, EPS declined 82%, and operating income declined 76%. The numbers don’t look good on the surface, but on the other hand, when U.S. banks reported earnings last month, they showed strong results in investment banking. BMO has a large U.S. investment banking segment, which is part of the reason its earnings declined last quarter. If it follows in its U.S. peers’ footsteps, the decline in i-banking fees should reverse. That may help BMO get its mojo back.