Recent surveys suggest that Canadians are very pessimistic on the state of the domestic and global economy as we approach the end of the summer season of 2023. While the economy is facing challenges, it has still performed solidly, all things considered. The negative outlook could largely be due to the pinch that Canadian consumers are feeling after the most aggressive interest rate-tightening policy shift since the beginning of the new millennium.
Canadians should not look to retreat from the market in this environment. On the contrary, when you stick with cash, you are inflicting more pain on your wallet as inflation remains high. Today, I want to look at three stocks that are worth buying in September if you have $4,000 to spend. Let’s jump in.
Why Hydro One looks like a good buy today
Hydro One (TSX: H) is based in Toronto and operates as an electricity transmission and distribution company. Indeed, this utility boasts a monopoly in the province of Ontario, the most populous in the country. Shares of this utility stock have dropped 3.5% month over month as of close on September 8. Meanwhile, the stock is down 3.8% so far in 2023.
This company released its second-quarter (Q2) fiscal 2023 earnings on August 9. It delivered basic earnings per share (EPS) growth of 2.3% to $0.44. Revenues rose to $1.85 billion compared to $1.84 billion in Q2 2022. Moreover, net cash from operating activities rose to $652 million compared to $621 million in the previous year. Hydro One is geared up for solid earnings growth as it is a profit machine with its Ontario monopoly.
Shares of Hydro One currently possess a solid price-to-earnings (P/E) ratio of 20. Meanwhile, the stock last declared a quarterly distribution of $0.2964 per share. That represents a 3.3% yield.
Here’s an undervalued stock I’m ready to snatch up in September 2023
BRP (TSX: DOO) is a Quebec-based company that is engaged in the design, development, manufacturing, distribution, and marketing of powersports vehicles and marine products in North America, Europe, and around the world. Its shares have plunged 10% over the past month. That has pushed the stock into negative territory in the year-to-date period. Investors can see more of its recent and past performances with the interactive price chart below.
In Q2 2023, BRP reported total revenues of $2.77 billion compared to $2.43 billion in the previous year. Moreover, gross profit rose to $697 million over $602 million. EBITDA stands for earnings before interest, taxes, depreciation, and amortization; this metric aims to give a better picture of a company’s profitability. BRP posted normalized EBITDA of $473 million — up from $418 million in the prior year.
This stock last had a very attractive P/E ratio of 8.1. Moreover, BRP offers a quarterly dividend of $0.18 per share, which represents a modest 0.7% yield.
One more stock I’m excited about this September
AltaGas (TSX: ALA) is a Calgary-based energy infrastructure company that operates in North America. Shares of this energy stock have increased 2.3% month over month. Meanwhile, the stock is up 14% so far in 2023.
The company delivered normalized income applicable to common shares of $133 million — up from $35 million in the previous year. This energy stock possesses a favourable P/E ratio of 13. Moreover, AltaGas offers a quarterly distribution of $0.28 per share, representing a solid 4.1% yield.
