The broader stock markets seem to be in a great spot going into the second half of 2024. Undoubtedly, the TSX Index has some catching up to do if it’s to be competitive with the S&P500 for the year. And while a comeback in financials (think the big banks) and various commodity (think energy) stocks could certainly help the TSX Index extend its run going into year’s end, I believe new investors shouldn’t pay too much focus to market-wide moves. Indeed, it can pay more dividends to view the stock market as a market of stocks.
This means it may be better to take more of a bottom-up approach to investing by analyzing individual companies themselves and asking yourself if the estimated value is less than the market value (the price a stock’s currently going for). Indeed, value investing can be tougher after a hot first-half rally. And though valuations may be a tad slimmer than a few months ago, especially in the U.S. markets, there’s still value to be had.
You just have to know where to look. In such hot markets, perhaps looking to the less “euphoric” corners of the market may improve your shot of getting a great value, even if the market itself is fairly valued.
Without further ado, let’s check out one intriguing Canadian value stock that I view as a bargain with considerable long-term upside.
Spin Master
First, we have beloved toymaker Spin Master (TSX: TOY), which has seen shares steadily sink lower over the past few years. Indeed, the $2.9 billion discretionary firm hasn’t exactly been a winner for investors, with the odd plunges occurring after less-than-stellar earnings results.
In any case, the company seems to have a strong toy lineup ahead of the holiday season. And while it may be a tad too early (it’s early summer, after all) to be buying a stock for the holiday sales potential, I think that now is as good a time as any to pick up a few shares of TOY stock while it’s in a tailspin.
At the end of the day, it’s the long-term horizon that matters most. With some impressive brands (PAW Patrol) and new, intriguing Japanese anime-focused toys on the roster, perhaps it’s time to give the award-winning toy firm a second look. The stock trades at 22.3 times trailing price to earnings (P/E), which isn’t all too bad considering the potential should the consumer finally be able to get spending again.
The stock’s down 52% from its all-time high hit all the way back in July 2018. Though I don’t see new highs coming anytime soon, I view TOY stock as having the means to turn a corner. With a nice 1.7% dividend yield, now seems to be a decent time to give the stock a spin while it’s going for cheap.
The Foolish bottom line
Spin Master stands out as one of those mid-cap stocks that many value hunters are overlooking. Sure, the consumer is under pressure, but as long as the toy firm keeps innovating, it will be ready for discretionary spending to boom again. Perhaps the holiday season of 2024 could be the year Spin breaks out of its tailspin!
