As TSX goes on the mend in the 12th and final month of the year, investors may wish to pick away at what remains of the value plays. After a hot run, stocks are, on average, less affordable today than just a few weeks ago. But that’s not to say all the bargains have evaporated! There are still a multitude of great value plays that may still have room to catch up with the red-hot TSX over the next year.
In this piece, we’ll look at a cheap duo of stocks that could move into rally mode going into the first half of 2024.
Spin Master
Spin Master (TSX: TOY) is more than just a small (at least relative to industry rivals) Canadian toy company; it’s a tech-savvy competitor that may be able to increase its market share in the space, even as consumer spending remains in a rough spot.
For those unfamiliar with the firm, it’s behind some legendary toy brands, including Etch-a-Sketch and Paw Patrol. If you have little ones, you probably own more than a handful of toys made by Spin. It’s not just toys where Spin excels, the firm has a robust digital games business, and its intellectual property has potential in televised (or streamed) media as well.
At the end of the day, Paw Patrol and its vast portfolio of brands act as a moat. For now, the market may not appreciate this. The stock trades at 15.6 times trailing price-to-earnings and appears “stuck” in a range between $31 and $39. I think the holiday season could be the much-needed catalyst to kick off the stock’s next leg higher. The stock’s cheap, perhaps too cheap for those bullish on 2024 in spite of the negative chatter regarding headwinds and a hard-hit consumer.
Sleep Country Canada Holdings
Sleep Country Canada Holdings (TSX: ZZZ) is a stock that’s been beaten down since it peaked in the back half of 2021. Though shares are closer to the bottom than the peak, I still view ample upside if the economy turns a corner within the next two years. Indeed, mattresses and bedding may not sell as well in a rocky environment as when times are good, and everybody has plenty of disposable income.
Either way, I think Sleep Country is positioned to have a nice run once things turn in their favour again. You can put off mattress sales for a long time. But eventually, when we feel better about the economic outlook, things can turn on a dime. As an investor, I’d look to get in well ahead of such a surge. It could be a long wait, but there’s a nice 4% dividend yield to keep you patient.
At 9.7 times trailing price to earnings, shares of ZZZ stand out as a stellar value play for patient contrarians seeking to beat the broader TSX Index over a long (think five years or more) timespan.
The Foolish bottom line
The TSX still has plenty of bargains. Spin Master and Sleep Country are two discretionary consumer plays that seem oversold and undervalued going into the holiday season.
