You can gain access to the equity markets with a low amount of capital and begin your investment journey. The popularity of zero-commission trading platforms has meant even $20 is enough to buy shares of quality companies, allowing shareholders to benefit from outsized gains over time.
Kinross Gold (TSX: K), Air Canada (TSX: AC), and Well Health (TSX: WELL) are three of my favourite TSX stocks trading under $20 a share. Letâs see why.
Kinross Gold stock
Historically, interest rates and gold prices are inversely related. So, investors can brace for an uptick in the prices of the yellow metal in 2024, given that interest rates may be lowered multiple times this year, making stocks such as Kinross Gold enticing investment options today.
Valued at $9.4 billion by market cap, Kinross Gold acquires, explores, and develops gold properties in the Americas. It is also involved in the extraction and processing of gold-containing ores and other precious metals such as silver.
Kinross ended the third quarter (Q3) with $471 million in operating cash flow and a free cash flow of US$123 million, indicating it allocated roughly US$350 million towards capital expenditures in the quarter. Its focus on organic growth should help Kinross Gold increase cash flows and dividends over time.
Currently, Kinross pays shareholders an annual dividend of $0.16 per share, indicating a yield of 2.1%. With a payout ratio of less than 40%, Kinross Gold has enough flexibility to raise dividends in 2024.
Air Canada stock
Airline stocks, including Air Canada, continue to trade significantly below all-time highs in a post-pandemic world.
Air Canada and its peers increased balance sheet debt significantly during COVID-19 to support their cash burn rates. While travel has rebounded post-lockdown restrictions, headwinds such as inflation and interest rates have eroded profit margins in the capital-intensive airline sector.
After delivering game-changing returns to shareholders in the decade prior to COVID-19, Air Canada stock is currently down 65% from all-time highs, valuing the company at $6.6 billion by market cap.
With $8.3 billion in cash and $14.4 billion in debt, Air Canada stock has enough liquidity to navigate an uncertain macro environment. It’s also forecast to improve adjusted earnings to $4.56 per share in 2023, compared to a loss of $2.76 per share in 2022.
Priced at four times forward earnings, Air Canada stock trades at a discount of 56% to consensus price target estimates.
Well Health stock
The final under-$20 stock on my list is Well Health, which has already returned 3,680% to shareholders since its initial public offering in 2016. Despite its outsized gains, Well Health stock is down 59% from all-time highs, allowing you to buy the dip.
Valued at $900 million by market cap, Well Health ended Q3 with sales of $204.5 million and adjusted earnings before interest, tax, depreciation and amortization of $28.2 million. The company surpassed 1.03 million patient visits in the quarter, with 1.58 million total care interactions.
Well Health forecasts sales between $755 million and $765 million in 2023, while the top line might exceed $900 million in 2024. This TSX stock also trades at a discount of 100% to consensus price targets.
