3 Cheap TSX Stocks to Buy in November 2023

Value investors can consider buying cheap TSX stocks such as Sleep Country Canada to enjoy inflation-beating returns on the rebound.

| More on:
edit Sale sign, value, discount

Image source: Getty Images

The ongoing pullback in the stock market provides investors an opportunity to go bottom fishing and buy quality stocks at a lower multiple. In fact, the time is ripe to create a portfolio of undervalued TSX stocks and benefit from outsized gains when market sentiment improves in the next 12 months. Sure, there is an equal chance for equities to move lower, given the macro environment remains challenging and sluggish. But timing the market bottom is impossible, making every major dip a buying opportunity.

Here are three cheap TSX stocks you can consider buying in November 2023.

Sleep Country Canada stock

Valued at $755 million by market cap, Sleep Country Canada (TSX:ZZZ) operates in the retail mattress and bedding space. Down 49% from all-time highs, the TSX stock currently pays shareholders an annual dividend of $0.95 per share, indicating a yield of 4.4%.

In recent quarters, Sleep Country has experienced softness in consumer demand due to macro headwinds such as higher interest rates and inflation. In the second quarter (Q2) of 2023, its same-store sales fell by 11% year over year while adjusted earnings narrowed by 41% to $0.25 per share.

However, the company acquired the Canadian operations of Casper Sleep, which includes six retail stores and its e-commerce platform, for $27.5 million in cash. It also expanded a partnership with Walmart Canada by opening two new Sleep Country Express stores in Walmart Supercenters.

Priced at 9.6 times forward earnings, Sleep Country stock trades at a discount of 45% to consensus price target estimates.

RB Global stock

Valued at $15.5 billion by market cap, RB Global (TSX:RBA) is an omnichannel marketplace that provides insights and transaction solutions for buyers and sellers of commercial assets and vehicles globally.

The company increased gross transaction volume by 146% year over year to $4.1 billion, including $2.2 billion from its acquisition of IAA. This acquisition allowed RB Global to increase sales by 128% year over year to $1.1 billion while net income grew 63% to $86.8 million.

Priced at 25.5 times forward earnings, RB Global stock trades at a reasonable valuation, given earnings are forecast to rise by 12% annually in the next five years.

Moreover, the company pays shareholders an annual dividend of $0.366 per share, indicating a yield of 1.7%. These payouts have more than tripled in the last 10 years.

FirstService stock

The final cheap TSX stock on my list is FirstService (TSX:FSV), a property management company with operations in the U.S. and Canada. Valued at $8.44 billion by market cap, FirstService has returned close to 500% to shareholders since its initial public offering in 2015, easily outpacing the broader markets.

Despite its outsized gains, FirstService trades at 29 times forward earnings, which might seem expensive. But its earnings are on track to expand by close to 18% annually in the next five years.

Its FirstService Residential business is the largest manager of residential communities, while FirstService Brands is among the largest providers of essential property services in North America.

In the first nine months of 2023, FirstService has increased revenue by 19% to $3.26 billion while adjusted earnings before interest, tax, depreciation and amortization grew 25% to $312.4 million.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends FirstService and Walmart. The Motley Fool has a disclosure policy.

More on Investing

question marks written reminders tickets
Tech Stocks

Nvidia’s Historic Stock Split: Will Investors See Bigger Gains?

Nvidia's (NASDAQ:NVDA) record 10:1 stock split entices many investors in several important ways. But some myths aren't technically correct.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Retirement

Retirees: 2 TSX Dividend Stocks That Have Raised Payouts Annually for Decades

These stocks offer high yields and should continue to raise their payouts.

Read more »

TFSA and coins
Investing

5 Canadian Stocks With a Real Chance of Tripling Your TFSA’s Value

TFSA balances can triple in value with five Canadian stocks that have delivered outsized gains in recent years.

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

Want $1 Million in Retirement? 3 Stocks to Buy Now and Hold for Decades

Growth stocks such as Docebo and Celsius Holdings should help you generate outsized gains in the upcoming decade.

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

This 8% Dividend Stock Pays Cash Every Month

Earn monthly cash of $154 with this 8% dividend stock.

Read more »

A miner down a mine shaft
Metals and Mining Stocks

Should Investors Buy the Correction in Lundin Mining Stock?

Lundin (TSX:LUN) stock has fallen by 10% in the last few weeks, but so has the price of copper. Coincidence?…

Read more »

Metals and Mining Stocks

Best Stocks to Buy in May 2024: TSX Materials Sector

A TSX materials sector ETF could help investors gain cheap diversified exposure to the hot sector's stocks – so will…

Read more »

man is enthralled with a movie in a theater
Investing

Should You Buy Cineplex While it’s Below $9?

With analysts expecting a significant recovery in the second half of 2024, is this the last chance to buy Cineplex…

Read more »