The stock market has been getting rougher in the second half. With it wobbling in both directions, it’s no mystery as to why the bears are back, with their gloomy projections and outlook. Indeed, it’s hard to buy any stock after you hear that more of the same could be in the cards.
While I’m sure many market forecasters and timers are quite sharp, you shouldn’t take any predictions of the future as any sort of gospel. No matter how well-supported a near-term forecast is, the future (and markets) is hard, if not impossible, to predict. Further, those who can consistently time markets probably wouldn’t share their secret sauce with the public!
If you’ve lived through a vicious market sell-off or crash, you’ll know that the chatter and commentary can skew in a direction based on the market’s recent trajectory. Sometimes market forecasts are really wrong, and if you follow them too closely, you may stand to miss out on some of the market’s best opportunities.
Recession or not, long-term investors should always be on the hunt for value. After the latest October slump, you should be looking for potential bargains. In this piece, we’ll check out a cheap trio.
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PetValu Holdings
PetValu Holdings (TSX: PET) is a pet supply retailer that has not done well of late. The stock is down over 42% from its high hit earlier this year. Indeed, the humanization of pets trend may be off the table now that consumers look to save money where possible.
As consumers cut back on pet purchases and adoptions, or opt to trade down to the cheap stuff, PetValu has felt the pinch. As economic headwinds subside, I think PetValu could be a winner as it continues to grow across the country.
The stock goes for 18.5 times trailing price-to-earnings, which is too cheap given its growth profile.
Aritzia
Aritzia (TSX: ATZ) is another battered growth play that may be worth checking out right here while it’s under pressure. The stock’s going for 22 times trailing price-to-earnings after a 58% spill from peak to trough. Consumers may not have as much to splurge on Aritzia’s latest clothing. However, once the Canadian recession passes (if it arrives at all), I’d look to be a net buyer while shares are undervalued.
At the end of the day, Aritzia’s long-term fundamentals still seem intact. But for now, expect macro headwinds to continue weighing, even as employment stays robust.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN) stock goes for just $8 and change after its historic stock crash. Indeed, utilities in general are feeling pain right now, thanks to high rates. With Algonquin’s unique issues thrown in, the result is a massive decline in excess of 63%. I have no idea when shares will bottom or if the dividend is in for another cut.
Either way, I think there’s value to be had, even as the firm sells off assets from left, right, and centre. With a $5.5 billion market cap, AQN stock may be the mid-cap to own for the long haul if you seek deep value.
