Capital Power (TSX: CPX), Mullen Group (TSX: MTL), and Spin Master (TSX: TOY) are buying opportunities for Canadian investors. The stocks are currently on sale right but are ready to rebound in 2024.
Growth-oriented power producer
Capital Power is down 13.22% from a year ago, but the year-to-date loss has improved to -0.12%. If you invest today and buy on weakness, you can partake in the generous 6.61%. The quarterly payout should be safe, given the low 46.37% payout ratio.
The $4.8 billion growth-oriented power producer caters to communities in Canada and the United States. Capital Power owns renewable and thermal power generation facilities (32 total) with a combined we own approximately 9,300 megawatts (MW) of power generation capacity of approximately 9,300 MW.
In the first quarter (Q1) of 2024, revenue and net income declined 11.7% and 28.1% year over year to $1.11 billion and $205 million. Still, its president and chief executive officer (CEO), Avik Dey, said, “We delivered affordable and reliable power across our diverse and strategically positioned fleet of flexible generation assets.”
Capital Power has good news for clean and green investors. Management said the company will be entirely off coal by mid-2024 with the startup of its simple cycle unit 2. Dey added that the deals to acquire the La Paloma and Harquahala generation assets are almost complete. Besides the diversified footprint into strategic regions, Capital Power will provide reliable, affordable power.
Softening demand
Mullen Group said the economy is slowing, as reflected in the lower-than-expected top and bottom-line first-quarter results. In the three months ended March 31, 2024, revenue and net income fell 7.1% and 30% to $462.6 million and $22.2 million versus Q1 2023.
This $1.13 billion company is one of Canada’s largest logistics providers. “Consumer demand continued to decline, capital investment in Canada was noticeably weaker, and major project construction activity virtually ground to a halt. It’s no wonder our results were down year over year,” said Murray K. Mullen, chairman and senior executive officer of Mullen.
However, he added that the diversified business model helps mitigate rapid changes in the market. Mullen can pursue acquisitions and boasts a core competency and competitive advantage. Management announced acquiring ContainerWorld Forwarding Services and its operating subsidiaries.
The well-established company offers integrated supply chain solutions to the alcoholic beverage and hospitality industries. Like Capital Power, Mullen’s 5.63% dividend and monthly payout compensate for the temporary weakness. The share price is $12.78 (-7.45% year to date).
Deep discount
Spin Master trades at a deep discount. At $29.01 per share, the year-to-date loss is 16.64%. The $3.01 billion global, fully-imagined children’s entertainment company is turning 30 soon, but business could have been better lately. While revenue in Q1 2024 increased 16.5% year over year to US$316.2 million, net loss widened to US$54.8 million compared to US$1.9 million in Q1 2023.
Its global president and CEO, Max Rangel, said the first quarter is typically the lowest quarter seasonally for the toy industry. Spin Master acquired Melissa & Doug early this year. According to management, the trusted brand in early childhood play is a strategic acquisition.
Rangel assures that Melissa & Doug complements Spin Master’s existing toy portfolio as it expands capabilities in early childhood play. Market analysts recommend a buy rating. Their 12-month average price target is $41.90 (+43.2%). TOY also pays a 1.65% dividend.
Earn two ways
Capital Power, Mullen Group, and Spin Master are stocks on sale but poised to rebound in 2024, if not soon. You can earn two ways from them: dividends and price appreciation.
