A bull run is defined as a time of stock price increases driven by strong demand and high confidence. In this article, I will explore two bargain stocks that are, in fact, setting up for a bull run. This run is being driven by strong results, coupled with low valuations.
Without further ado, here they are.
Agnico-Eagle Mines
Despite the fact that Agnico-Eagle Mines Ltd. (TSX:AEM) is one of the top-quality gold mining operations out there, its stock has been pretty underwhelming. Even though the price of gold has increased 30% in the last three years, Agnico’s stock price is pretty much flat.
But today, things are changing. I believe that the qualities of this company are more attractive to investors today than ever. You see, Agnico is a low-risk gold miner, with all of its mines located in politically safe, pro-mining jurisdictions. This includes places like Canada, Europe, Australia, and Mexico. It’s a strategy that always had clear value, but today, with increased geopolitical risks globally, it’s all the more relevant and valuable.
At the time of writing, Agnico-Eagle stock is up approximately 4% so far. It’s rallying off of another strong quarter that once again beat expectations and reminded investors what a high-quality gold stock this is. The company’s first quarter adjusted earnings per share (EPS) came in at $0.76 compared to consensus expectations that were calling for $0.65. This compares to $0.57 last year and amounts to a 33% growth rate.
This was driven by strong production, which increased 8% to 879,000 ounces, and lower depreciation and tax expense. Looking ahead, Agnico-Eagle is expected to continue to benefit from strong production and operational performance. Estimates for this year have already been going up, a reflection of the low expectations (and valuation) that investors have put on the stock. At this time, 2024 EPS is expected to come in at $2.65 versus $2.23 in 2023, for a 19% growth rate.
Cineplex
As one of the most undervalued and underappreciated stocks on the TSX today, Cineplex Inc. (TSX:CGX) is a real bargain that I believe is setting up for a bull run.
I believe this for two main reasons. The first is the fact that the pandemic is behind us and Cineplex is on the road to recovery. Whatever Cineplex had control over, even during the pandemic years, was managed well – it’s a high-quality company with high quality management.
The second reason is because the negative effect of the writer’s strike is largely behind Cineplex. Last year, the writer’s strike really hit the movie content slate, which had a negative effect on attendance. Today, high-quality movies are back, and the audiences are there for it, as is reflected in the latest box office numbers.
Box office revenue increased 46% to $59.2 million. This was 95% of 2019, pre-pandemic levels, and 146% of 2023 levels. This stellar performance was the result of good movie content, such as Dune: Part 2, Godzilla x Kong, and Kung Fu Panda 4.
Despite all of this, Cineplex stock’s valuation remains in depressed, ultra-undervalued territory. It’s trading at 18 times this year’s consensus EPS expectation, and 9 times 2025’s consensus EPS expectation. It actually suggests that Cineplex’s earnings will not recover back to pre-pandemic levels.
But this, as we have seen, is not true. First of all, March’s box office revenue was 95% of pre-pandemic levels. Also, attendance levels confirm that the movie-going experience is still very much in demand.
Cineplex stock is up 15% in the last month and still trades at a very depressed 10 times 2025 consensus earnings expectation.
