2 Canadian Stocks to Watch While They’re Still Dirt Cheap

Bank of Nova Scotia (TSX:BNS) stock is a great value play that doesn’t get the respect it deserves.

| More on:
Canadian Red maple leaves seamless wallpaper pattern

Source: Getty Images

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.

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 Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

More on Investing

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

financial freedom sign

2 Stocks With Millionaire-Maker Potential

These two top Canadian stocks are among the best on the TSX, and each has the potential to be millionaire-maker…

Read more »

Piggy bank next to a financial report
Stocks for Beginners

Is It Finally the Right Time to Buy Bank Stocks?

Canadian bank stocks are some of the most secure investments out there, but of them all, this bank stock is…

Read more »

clock time

3 Blue-Chip Stocks Every Canadian Should Own

Want some reliable blue-chip Canadian stocks to buy and hold for the next 10 years? These three stocks are worth…

Read more »

gas station, car, and 24-hour store

ATD Stock: Buy, Sell, or Hold Today?

Let's dive into whether Alimentation Couche-Tard (TSX:ATD) is a buy here, or whether ATD stock could have more risk than…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »