The S&P/TSX Composite Index plunged 186 points on Wednesday, September 6. Some of the worst-performing sectors included health care, utilities, industrials, and telecoms. Investors have been forced to stomach poor market conditions in Canada since the middle of August. However, this climate also provides a great chance for opportunistic investors to snatch up quality equities at a discount. Today, I want to zero in on three top stocks that have gone on sale in the late summer season. Let’s dive in.
Now is the perfect time to snatch up reeling bank stocks for cheap!
Bank of Montreal (TSX:BMO) is the third largest of the Big Six Canadian bank stocks. Like TD Bank, BMO boasts a large footprint in the United States banking space. This makes the bank stock a unique target for investors who want exposure to the largest and most dynamic economy. Shares of BMO have dropped 2.5% month over month as of close on September 6. The top stock is down 7.4% so far in 2023.
This bank released its third quarter (Q3) fiscal 2023 earnings on August 29. BMO reported adjusted net income of $2.03 billion or $2.78 adjusted diluted earnings per share (EPS) — down from $2.13 billion, or $3.09 per diluted EPS, in the previous year. Earnings were dragged down by a significant spike in provisions set aside for credit losses (PCL), which rose to $492 million compared to $136 million in Q3 2022.
Shares of BMO currently possess a favourable price-to-earnings (P/E) ratio of 11. Moreover, this top stock last paid out a quarterly dividend of $1.47 per share. That represents a strong 5.1% yield.
I’m shouting “BUY!” from the rooftops when it comes to this top stock
Over the past few months, I have reiterated my bullish take on Pet Valu (TSX:PET) over and over again. The pet care and accessories market is geared up for strong growth over the next decade, as pet purchases exploded during the COVID-19 pandemic. There is no better time to seek exposure to this industry. Better yet, Pet Valu is on sale right now. Its shares have plummeted 34% so far in 2023 as of close on September 6.
In Q2 2023, this company delivered system-wide sales growth of 10% to $343 million. Meanwhile, revenue increased 12% to $256 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 3.9% to $53.8 million.
This top stock last had an attractive P/E ratio of 19, putting it in much better value territory than most of its industry peers. Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Pet Valu last had an RSI of 35, putting it just outside technically oversold levels. Better yet, Pet Valu offers a quarterly dividend of $0.10 per share, which represents a modest 1.5% yield.
One more top stock I’d look to buy on the dip in early September 2023
Restaurant Brands International (TSX:QSR) is the third and final top stock I’d look to snatch up on the dip in the final days of the summer season. This Toronto-based company operates as a quick-service restaurant chain. Its subsidiaries are Burger King, Tim Hortons, Popeyes Louisiana Chicken, and its most recently added Firehouse Subs to its restaurant stable. Shares of RBI have dropped 8.4% over the past month. The stock is still up 3.5% in 2023.
This company delivered consolidated comparable sales growth of 9.6% in Q2 2023. Meanwhile, adjusted EBITDA increased 10% year over year to $665 million. Adjusted diluted EPS climbed 6.6% to $0.85.
Shares of this top stock currently possess an RSI of 32. The stock has spent much of mid- to late August and early September in or near oversold territory. Moreover, RBI offers a quarterly dividend of $0.55 per share, representing a 3.2% yield.
