Quality, lower-priced stocks can help you gain access to the equity market with just a small amount of capital. While a cheap stock may be attractive, you still need to analyze its fundamentals and growth potential before making an investment.
Here, I have shortlisted three top TSX stocks you can buy for less than $20.
Kinross Gold stock
Priced at $6.84 per share, Kinross Gold (TSX: K) is valued at a market cap of $8.4 billion. It is involved in the production, acquisition, exploration, and development of gold properties in the U.S., Russia, Chile, Brazil, Ghana, and Mauritania.
Mining companies such as Kinross Gold can be a proxy for investing in gold, which further diversifies your portfolio. Generally, the share prices of gold miners are tied to gold prices. Moreover, as gold prices and interest rates have an inverse relationship, Kinross Gold stock trades 48% below all-time highs due to a steep increase in bond yields over the past 18 months.
In the second quarter (Q2) of 2023, Kinross increased its production by more than 22% year over year, allowing it to deliver $247 in free cash flow, up from $108 million in the year-ago period. Due to higher production numbers, Kinross has also improved adjusted earnings by over 150% in the first six months of 2023 to $0.21 per share.
Priced at 12.5 times forward earnings, Kinross stock is quite cheap and also pays shareholders an annual dividend of $0.16 per share, translating to a yield of 2.4%. The TSX stock trades at a discount of 27% to consensus price target estimates.
RioCan REIT stock
Among the largest real estate investment trusts (REIT) in Canada, RioCan (TSX: REI.UN) stock is priced at $19.4. Valued at a market cap of $5.8 billion, RioCan owns, manages, and develops retail-focused properties in prime, high-density areas where Canadians want to shop, live, and work.
At the end of Q2, RioCan’s portfolio consisted of 193 properties with a net leasable area of 33.5 million square feet. Its widening portfolio of cash-generating properties allows RioCan to pay investors an annual dividend of $1.08 per share, indicating a yield of 5.6%.
It ended Q2 with FFO (funds from operations) of $0.44 per share. Given its monthly dividend of $0.09 per share, RioCan has a payout ratio of 62%, which is quite sustainable.
The REIT also trades at a discount of 20% to consensus price target estimates.
Enerflex stock
The final under $20 TSX stock on my list is Enerflex (TSX: EFX), an energy infrastructure company. In the first six months of 2023, Enerflex increased sales by more than 100% year over year to $776.7 million. Its adjusted earnings before interest, tax, depreciation, and amortization more than tripled to $265 million from $82.7 million in the year-ago period.
Priced at 8.4 times 2024 earnings, EFX stock is really cheap and trades at a discount of 50% to consensus price target estimates.
In 2023, Enerflex is focused on the integration of Exterran, a company it recently acquired. Enerflex is also looking to strengthen its financial position and reduce balance sheet debt to ensure financial stability across market cycles.
