September is a month associated with seasonal change. It is the month when many traders return from their summer vacations, and mutual funds book their losses to harvest tax. You can call it a warm-up before the seasonal rally. Hence, it is the perfect month for value hunting, as you can find some good stocks trading at heavy discounts.
Three top Canadian value stocks to buy in September
I have identified three value stocks that are trading at attractive prices.
Hive
Hive Digital Technologies (TSXV:HIVE) stock has dipped 45% from its high and is closing in on the sweet spot of $4.5. I am bullish on the crypto miner at this price point. Hive is harnessing the power of its data centres to offer graphic processing units (GPUs) as a service. At present, Hive’s revenue and profits fluctuate alongside Bitcoin prices. It is because it earns revenue from selling BTC it has mined and by validating transactions.
The Ethereum merge reduced profit margins on Ethereum mining. Hence, Hive replaced Ethereum with Hive GPU-as-a-service, which will help it earn a fee for lending its GPU computing power to companies working on artificial intelligence (AI), Web 3.0, and other high-performance computing tasks. The GPU as a service has a slow start. When it scales, it will grow by leaps and bounds.
Similar is the case with BTC. The uncertainty around crypto adoption and several scams might affect new coins, but BTC is the safest in the crypto universe. Hive will benefit when the BTC price rises.
This dual opportunity of BTC mining and GPU as a service makes me bullish on it. You can accumulate Hive stocks whenever they fall at or below $4.5. You can divide your Hive holdings into short-term gains — wherein you sell them whenever the stock price crosses $8 — and long-term holdings — wherein you hold the stocks for the next crypto bubble. Now is the time to add some Hive to your portfolio.
Dye & Durham stock
Legal practice management software Dye & Durham (TSX: DND) stock fell 15% since July after a short jump when the company announced the sale of its recently acquired TM Group U.K. to Aurelius. The TM Group sale comes as the U.K. regulator cancelled the acquisition over competition concerns. The cancellation comes as a relief as acquisitions of Link and TM Group were delaying DND’s growth and piling up debt in a high-interest environment. Its fiscal third-quarter financing costs more than doubled to $40.2 million ($18.2 million a year ago) because of the failed acquisitions.
However, DND is past the delays and is now focusing on future growth. It hit the milestone of $100 million in annual recurring revenue (ARR) in July. The company is rapidly growing its ARR from $9 million in the September 2022 quarter to $66.8 million (18% of total revenue) in March 2023. It aims to achieve an ARR of more than 50% of total revenue by fiscal 2026 organically and through acquisitions.
DND stock is trading lower as its $1.27 billion debt is greater than its equity market capitalization of $990 million. However, the company is reducing its debt from the sales proceeds of TM Group. It is a good time to buy the stock as the software grows its ARR. It shows that the software is sticky. Scaling its operations will enhance its profit margins and drive growth in the long term.
Enbridge stock
Enbridge (TSX: ENB) is a no-brainer stock to buy whenever it dips. The stock has been in a bearish momentum since April as oil prices cooled. While lower oil prices do impact Enbridge stock for a while, it is a good sign, as it pushes oil demand upwards. As Enbridge earns toll money on volumes transmitted, it is better off in both scenarios. Hence, the stock price dip during the demand transition is an attractive time to buy.
The pipeline stock has started a recovery rally, rising 4% in five days. If you buy the stock today, you still have a chance to lock in greater than 7% dividend yield.
