The ride on the TSX hasn’t been smooth in 2023 due to rapidly rising interest rates and the possibility of more rate hikes. Because of the constant market pullback, previous performers are in the red.
You can buy Northland Power (TSX: NPI), Boralex (TSX: BLX), Pet Valu Holdings (TSX: PET), and Converge Technology Solutions (TSX: CTS) at a discount. These four struggling stocks will eventually stage a comeback and deliver healthy returns.
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Monthly dividends
Utilities are sensitive to rate movements, so seeing the sector in negative territory (-8.9%) isn’t surprising. At $22.52 per share (-37.44% year to date), Northland Power trades at a deep discount. Still, income-focused investors favour this utility stock. Besides the hefty 5.5% dividend yield, the payout frequency is monthly.
The $5.7 billion independent power producer hasn’t missed a dividend payment since 2018. Northland builds, owns, and operates clean and green global power infrastructure assets in Asia, Europe, Latin America, and North America. Expect more ESG (environmental, social, and governance) investors to gravitate to this green stock as the transition to clean energy accelerates.
Unique positioning
Boralex owns and operates renewable energy power facilities. Besides the Canadian market, this $3 billion power company is France’s largest independent producer of onshore wind power. It has solar, wind, and hydroelectric assets in the U.S. and three development projects in the United Kingdom.
If you invest today, the stock trades at $29.20 per share (-26.01% year to date) and pays a decent 2.29% dividend. Because of Boralex’s unique positioning, management commits to delivering growth, dividend returns, and long-term value creation.
In the first half of 2023, revenue and net earnings increased 29% and 9% to $508 million and $77 million versus the first half of 2022. Its president and chief executive officer (CEO), Patrick Decostre, said Boralex is expanding its energy storage portfolio and achieving the 2025 Strategic Plan’s growth and diversification objectives. Under the Ontario request for proposals, Boralex selected two energy storage projects.
Largest distribution centre
Pet Valu is a niche player in the specialty retail industry. The $1.75 billion company is a retailer and wholesaler of pet foods, treats, toys, apparel, and accessories in Canada. The share price is only $24.30 compared to $34.16 five months ago. Market analysts have a 12-month average price target of $40.
Management maintains an optimistic business outlook. On September 13, 2023, Pet Valu opened the country’s largest pet specialty distribution centre. The 670,000-square-foot, state-of-the-art Brampton facility with robotics automation installation will bring unprecedented scale and automation to Canada’s pet sector as the largest distribution centre.
AI deployment
Technology is the top-performing sector thus far in 2023, but some constituents underperform. Converge Technology trades at only $2.82 per share (-38.17% year to date) but is primed for a breakout because of artificial intelligence (AI).
The $579.93 million software-enabled IT, and Cloud Solutions provider will build and securely deploy the latest AI, including IBM’s Watsonx. Apart from AI, Converge is building solutions with strategic partners in the cybersecurity space.
Buying on weakness
The four stocks in focus are great buys today. You’re buying on weakness in anticipation of a turnaround and massive potential returns.
