Valuation always matters, especially when other investors seem to forget the value of valuation! With stocks heating up into the tail end of the year, investors should proceed with stocks of great companies that trade at multiples that are reasonable.
Indeed, market bargains can be hard to uncover in today’s fast-moving market, with investors piling into securities with hopes of lower interest rates for the new year. Lower rates alone do not guarantee a solid year of profits. Instead of focusing on the trajectory of rates, investors should narrow in on undervalued pockets of the market so that they can fare well over the next three years and beyond.
Indeed, the longer your investing horizon, the better. But I’d say a minimum of three years is needed for Mr. Market to come to his senses with certain undervalued plays that may not be so timely.
Without further ado, let’s jump right into the two TSX market bargains that I think offer a great value for your money going into year-end.
Spin Master (TSX:TOY) is a Canadian toy company that may be in for a surprisingly decent holiday season. The consumer has exhibited some forms of strength in recent months (that Black Friday was impressive), and with expectations quite low for toy firms, including Spin Master, I’d look for the value pick to fare all right as it continues flatlining after last year’s painful plunge from around $45 per share to the low $30 range.
Shares of TOY plunged 4% on Tuesday, as it was revealed that one of its rival toy companies was undergoing mass layoffs. With “disappointing” sales weighing down the industry in October, the market seems to be worried about what comes next for the toy industry. It’s hard to find anyone who’s remotely bullish about the toy industry’s prospects as we skate into the holidays.
In any case, TOY stock stands out as a way to play the long game in the industry. With a vast portfolio is impressive toy brands and a valuation that’s rather easy to get behind (15.4 times trailing price to earnings), TOY stock may be the name to buy and hold for the next three years as discretionary retail slowly returns to its former glory.
Jamieson Wellness (TSX:JWEL) is a vitamin and supplements maker that’s pretty easy to misunderstand. It’s more than just an old-time company selling commoditized products. The firm has a trusted brand in a market that may be known to come up short when it comes to labelled dosages.
With some of the best quality control procedures in the industry and a knack for delivering what’s promised, Jamieson stands out as a company that has a moat around its business. Further, its relatively muted costs of production act as an advantage as the firm continues with various growth endeavours.
From expanding internationally to exploring new product categories, Jamieson is an under-the-radar growth company that has a ton of growth potential as a mere $1.2 billion company in a gigantic market playing field!
Sure, supplements may be viewed as boring to some younger investors, but the growth profile is anything but!