Canadian investors were forced to contend with considerable volatility in the middle of August 2023. In early September, reports indicate that the Bank of Canada (BoC) is looking to indefinitely pause interest rate hikes in the face of broader economic stagnation. Fortunately, these volatility periods also offer fantastic opportunities for long-term investors on the hunt for value and growth.
Today, I want to zero in on three stocks that you will be happy to have snagged at a good price.
This retail giant is the first stock I’d buy at a discount today
Canadian Tire (TSX: CTC.A) is the first undervalued stock I’d look to snatch up in early September. This Toronto-based company provides a range of retail goods and services in Canada. Shares of this TSX stock have dropped 9.5% month over month as of close on Friday, August 31. However, the stock is still up 8.7% so far in 2023. Investors can see more of its performance with the interactive price chart below.
This company released its second quarter (Q2) fiscal 2023 earnings on August 10. Canadian Tire reported total revenue of $4.25 billion in Q2 2023 — down 3.4% compared to the previous year. Meanwhile, normalized diluted earnings per share (EPS) fell to $3.08 compared to $3.11 in Q2 2022.
Shares of this TSX stock currently possess a favourable price-to-earnings (P/E) ratio of 11. Moreover, Canadian Tire offers a quarterly dividend of $1.725 per share. That represents a solid 4.3% yield.
I’m still stacking this potential growth dynamo in September
Pet Valu (TSX: PET) is a TSX stock I’m still looking to snatch up in September 2023. This Markham-based company is engaged in the retail and wholesale of pet foods, treats, toys, apparel, and accessories in Canada. Its shares have plunged 34% in the year-to-date period. The stock is down 23% over the past year.
Fortune Business Insights valued the global pet care market at US$235 billion in 2022. That same report projected that the pet care market will deliver a compound annual growth rate (CAGR) of 5.9% from 2023 through to 2030. In Q2 2023, Pet Valu posted system-wide sales of 10% to $343 million. EBITDA stands for earnings before interest, taxes, depreciation, and amortization; this metric aims to give a clearer picture of a company’s profitability. Pet Valu delivered adjusted EBITDA growth of 3.9% to $53.8 million.
The 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 this stock just outside of technically oversold territory. Moreover, it possesses an attractive P/E ratio of 19. The stock also offers a quarterly dividend of $0.10 per share, which represents a modest 1.5% yield.
Why this cheap bank stock needs to be on your radar right now
Bank of Montreal (TSX: BMO) is the third and final stock I’d look to snatch up on the dip in early September. BMO is the third largest of the Big Six Canadian bank stocks, behind the behemoths Royal Bank and TD Bank. Shares of this bank stock have dropped 5.9% in 2023. That has pushed BMO stock into negative territory in the year-over-year period.
The bank released its Q3 fiscal 2023 earnings on August 29. It reported adjusted net earnings of $2.03 billion, or $2.78 in adjusted earnings per share (EPS) — down from $2.13 billion or $3.09 adjusted EPS in Q3 2022. Earnings were dragged down by a significant increase in provisions set aside for credit losses.
Shares of BMO last had a very favourable P/E ratio of 11. The bank stock offers a quarterly distribution of $1.47 per share, representing a strong 5% yield.
