It’s been a brutal autumn season for stocks thus far. Undoubtedly, September continues to be a month of investor pain. And though the selling activity has dragged into October, with an aura of spookiness going into Halloween week, I’d argue that now is a terrible time to be spooked out of markets. Why? I’d argue stocks were in need of some sort of correction (or half correction) after the steep upward move enjoyed for most of the summer. Indeed, stocks were oversold in 2022 and were in need of continued relief.
However, it’s only healthy for stocks to experience road bumps, so they don’t speed too far ahead of themselves. In that regard, I view the recent September and October cool-off as not only nothing to hit the panic button over but as a potential window of opportunity to buy high-quality companies while they’re out of favour.
Indeed, you really do not need to look far for a market bargain these days. Even the stocks that have shrugged off the recent wave of selling may prove deeply undervalued. For instance, consider shares of convenience store firm Alimentation Couche-Tard (TSX:ATD), which is just over 2% away from its all-time high.
Couche-Tard stock: More than worth the price of admission!
The company’s amazing balance sheet is viewed as a plus nowadays, with rates moving to the highest point in more than a decade. Indeed, nobody knows if rates will stay high. If they do, Couche-Tard’s strong balance sheet will look that much better. And you can be sure many investors will want to pay up for Couche’s enviable liquidity once more opportunities in the space begin to open up.
In a prior piece, I shed light on the company’s five-year plan, which, I believe, it could exceed, even if a recession hits us at some point over the next year or so. Indeed, Couche-Tard is one of those predictable cash cows that have the means to grow earnings at a steady pace over time. And though the stock is so close to a new high, I still think it’s undervalued, perhaps deeply undervalued.
Either way, 17.45 times trailing price to earnings doesn’t seem like a hefty price tag to pay for such a powerful, profitable, and predictable company that’s poised to continue outperforming in the next five years (and beyond).
Apple stock: The iPhone maker looks cheap
Apple (NASDAQ:AAPL) stock is quite out of favour right now, thanks in part to some mixed iPhone sales reports out of China. Undoubtedly, the Chinese market is a huge source of growth for the firm. So, it’s quite discouraging to hear that Chinese rivals may be getting a leg up over the firm.
In any case, I think Apple stock is oversold, with long-term opportunities that seem to be overlooked. Even if the iPhone 15 doesn’t sell so well in China, I think it’ll do well in the United States. Further, look for Apple to keep growing its services business, which could drive even more multiple expansion in the stock.
All considered, I view Apple stock as oversold enough that Canadian investors may wish to make the U.S.-to-Canadian dollar swap, even with the less-than-favourable rate. At the end of the day, Apple is a great company that will experience swings based on nearer-term factors.
