Canadian stocks are looking quite cheap these days, especially compared to some of the other global markets out there. Not only do some of the homegrown TSX stocks look quite affordable, but they also are starting to gain a bit of traction, even as the tech-heavy Nasdaq 100 begins to show subtle signs of stalling out. Indeed, the Nasdaq has been blistering hot due to the rise of mega-cap tech and their AI hopes. As the story begins to shift toward value and perhaps away from the market’s most impressive momentum plays, I do think the Canadian market is worth watching very closely.
So, if you spot value on this side of the border, I think it makes a ton of sense to consider picking up a few names before they have the opportunity to swing back. Indeed, the TSX Index may just have its moment to outshine the red-hot S&P 500 in the second half of 2024. Not to discount the growth to be had from the AI plays keeping markets hot right now, but I do think that value names have been neglected and that, in due time, they will have their moment in the sun again.
In this piece, we’ll check out two value stocks that Canadian investors should have on their radars as we move into a summertime that may see the market’s hottest momentum plays begin to feel the chilly breeze for a change.
Manulife Financial
Manulife Financial (TSX:MFC) has been a perennial underperformer for many new investors until recently. After consolidating close to $25 per share for many years, shares of MFC suddenly broke out in a big way. Like a coiled spring, MFC stock suddenly became a name that Canadian investors have been talking about. Today, the stock is close to more than decade-long highs at close to $36 per share.
Despite the breakout, the stock remains dirt-cheap at 9.6 times forward price-to-earnings (P/E). That’s a stupidly low multiple which, when combined with recent momentum, makes for a pretty interesting stock that caters to value, momentum, and passive income investors alike.
Sure, the 4.5% yield isn’t as towering as it was a year ago, but it’s still generous. Also, with improved fundamentals and a brighter outlook, MFC stock arguably looks better than it did a year or two ago. As Asian growth starts to move the needle, perhaps Manulife is the timeliest of TSX value stocks this summer.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS), or Scotiabank, is a Canadian bank that’s also being slept on, in my opinion. Sure, the international exposure made the bank feel more of recent macro headwinds. But the tides are changing, and I don’t think it will be very long before Scotiabank’s international segment starts punching above its weight class again.
The stock is also incredibly bountiful with its 6.9% dividend yield. At 10.4 times trailing P/E, BNS stock also stands out as a neglected value play that will pay you a great deal to wait. If you have the patience, Scotiabank’s a great bank to consider nibbling at this July while others around you dismiss value for AI euphoria.
