If you are looking for cheap stocks, there are bargains all over the TSX. Worries about rising interest rates, slowing economic growth, and geopolitical tension continue to weigh on the market.
If you can look through all of these challenges, you can find some diamonds in the rough. Small-cap stocks, real estate, and certain discretionary stocks all look cheap. Here’s a stock in each of those categories to consider buying right now.
A cheap small-cap stock
With a market cap of $314 million, Propel Holdings (TSX:PRL) certainly fits the description of an up-and-coming TSX small-cap stock. Propel provides a mix of short-term loans to underserved sub-prime consumers in the U.S. and Canada. It operates through an artificial intelligence-powered online lending platform and through bank partnerships.
Last quarter, it grew revenues by 33% to $71 million. Adjusted net income per share rose 96% to $0.23. Over the last 12 months, revenues and earnings per share increased 75% and 47%, respectively.
This TSX stock only trades with a price-to-forward earnings (P/E) ratio of 5.7 times. That is even after the stock is up 27% this year. It also pays a very attractive 4.42% dividend yield.
It is almost impossible to find another stock that is growing so fast but is also extremely cheap. This stock does have economic risks, but given the valuation, you still have a wide margin of safety.
Real estate, beaten down but not forever
One of the biggest market segments that have been hurt in 2022 and 2023 is real estate. Real estate transactions have slowed as the market waits for interest rates to stabilize (or wishfully decline).
This has been a temporary detriment to Colliers International Group (TSX:CIGI), which is a major commercial real estate broker around the globe. Yet the market doesn’t understand that this TSX stock has diversified over half its business into stable, recurring revenue segments like property management, project management/engineering, and asset management.
Colliers has an excellent track record as a long-term compounder. Over the past 10 years, it has compounded total returns by a +20% annual rate. Management continues to target similar returns over the long term. This TSX stock only trades for 15 times its projected earnings for 2023. That is a deal if it can continue to deliver returns aligned with its long-term average.
A retail stock down on its luck
Aritzia (TSX:ATZ) has had a rough year in 2023. This TSX stock has fallen 50%! Yet we may be getting close to peak pessimism (which can often be a great time to add a stock). Sure, there are concerns about a slowing consumer. Likewise, there have been a few missteps by management in recent quarters.
Yet the fundamentals of its acclaimed brand, quality apparel, and great retail locations remain relatively intact. Aritzia has had some massive growth since the pandemic. As a result, there have been some growing pains. Yet, it continues to have a large market to expand into in the United States and eventually abroad (Europe and Asia, potentially).
Right now, this stock trades for 15 times earnings. That is the cheapest it has been since the pandemic market crash. You may need to be a contrarian, but this could be a stock with significant upside if management can properly execute its strategy.
