As the stock market continues to exhibit weakness going into mid-September, investors should be ready to go after the market bargains that may fly past their radar. Indeed, cheap stocks can always get cheaper, especially as investors grow increasingly fearful. As the market pendulum moves from greed (thanks to the recent run in tech stocks) back to fear and doubt, investors waiting on the sidelines may have a chance to put on their contrarian hats.
Indeed, we’re a bit overdue for a market correction. And though high rates and other economic woes are well known by market participants, it’s worth noting that sometimes markets don’t really need a reason to fall into a funk.
September has never been a great month for stock gains, but it’s never a good idea to double down on arbitrary seasonal trends. Who knows? Stocks could be surging higher by month’s end, similar to what happened in the back half of August!
That’s why I’d be an incremental buyer over time, so you can take advantage of falling prices rather than dropping a lump sum into a stock at once.
Here are two value plays on my radar going into fall 2023.
PetValu Holdings
What a dreadful past few quarters it has been for Canadian pet supply retailer PetValu Holdings (TSX: PET). The stock is down a whopping 34% year to date and is now off around 40% from its all-time high hit back in February 2023.
What’s behind the painful flop? The top Canadian pet play stumbled in recent quarters. Though the latest (second) quarter saw a slight earnings per share beat of $0.36, ahead of the $0.34 estimate, there are growing profitability concerns, as the company looks to expand its store footprint by as much as 50 new stores for 2023.
After the plunge, shares look really cheap, given the defensive growth to be had. The stock trades at 19.5 times trailing price to earnings. It’s not at all a high price to pay for such a high-calibre retailer that has plenty of room to grow across the nation. The 1.4% dividend yield is a nice bonus.
Rogers Communications
Up next, we have Rogers Communications (TSX: RCI.B), which has succumbed to the massive headwinds hitting the telecom scene in recent quarters. The stock has lost around 25% of its value from its April 2022 peak. Still, that’s not as bad a hit compared to some of its peers in the space. The dividend yield sits just below 3.8%, with an 18.94 times trailing price-to-earnings multiple.
Though the yield isn’t towering, the valuation and relative growth runway (with Shaw assets considered) make the name more attractive than its bigger brothers in the telecom industry. It’s been a wild ride for Rogers stock over the years. However, value and income seekers shouldn’t ignore the name as it bounces back from its latest rut.
The bottom line for dividend investors
PetValu and Rogers are intriguing value options for those seeking to get great value for their money as we head into a turbulent end to the summer season!
