The Market Is Picking Up Steam, but These 2 Stocks Are Still Cheap (for Now)

Parkland Fuel (TSX:PKI) and another value stock that remain cheap as the market rally continues through May 2024.

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It’s not hard to imagine many beginner investors feeling just a bit more hopeful this May, with the TSX Index climbing steadily after slipping a bit in April. Indeed, that much-needed pullback many have been waiting for may have come and gone. And if you didn’t buy on that dip, don’t fret, as there are always great deals to be had in the market if you know where to look for them!

As the market picks up a bit of momentum, perhaps enough to drive higher highs, investors should look to a group that could evolve to become the next leaders. Undoubtedly, many Canadians may have slept on the TSX stocks as their U.S. stocks, most notably the mega-cap tech titans that provide considerable exposure to the AI race, have flexed their muscles for the last year.

So, without further ado, here are two intriguing value options for investors looking to do well for the rest of the year and the next three years.

Parkland Fuel

Parkland Fuel (TSX:PKI) is a gas station and convenience store operator that’s been nosediving so far this year. Shares are now back to $40 per share after flirting with $48 just a few months ago.

Undoubtedly, Parkland has run head-on into quite a few pressures, with a rough first-quarter loss taking a toll. Indeed, the company isn’t the only convenience retail operator that’s been sinking of late. In any case, the dip has felt rather vicious, with shares now down more than 16% from its 52-week high. I think the dip is more than buyable, as the firm puts itself out there to draw in a potential buyer.

Undoubtedly, Parkland, a $6.9 billion firm, makes for a nice bite-sized deal for any acquirer looking to expand their presence. Whether the company sells a chunk of its stores or is gobbled up by a much larger peer remains to be seen. Either way, I view the stock as nothing short of intriguing, as its fate is clouded with haze.

At 18.4 times trailing price-to-earnings (P/E), the stock looks way too cheap, with a dividend that’s quite rich (3.45% yield).

North West Company

North West Company (TSX:NWC) is an even smaller retailer with its $1.8 billion market cap. The retailer, which serves numerous remote communities, may have been slammed by some on social media over price increases. And though many are fed up with inflation after what’s been a rough few years, I do think that North West will move past consumer distaste for jacked-up prices.

There’s never an easy way to increase prices. The good news for North West is that there aren’t really many alternatives for consumers to get better prices. If there were, they would have switched by now. Indeed, many remote communities are “food deserts” that rely heavily on North West retail locations to thrive.

The stock trades at a 14.4 times trailing P/E, with a 4.1% dividend yield. With shares pretty close to all-time highs after a lengthy consolidation period, investors may wish to nibble while the price of admission is relatively muted.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends North West. The Motley Fool has a disclosure policy.

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