2 Top Stocks for the Second Half of 2024

Are you looking for some great bargains to buy for the second half of 2024? Here are two undervalued TSX stocks to buy right now.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The first half of the year has been decent for Canadian stocks. The TSX Index is up 5.5% year to date. However, when compared to the S&P 500’s 17% return, it doesn’t quite compare.

The TSX has some good stocks, but don’t buy the index

The TSX is home to a few excellent high-performing companies, several steady performers, many mediocre businesses, and several less-than-great businesses. The Canadian market is a stock pickers market.

You don’t really want to own the index if you want to have strong long-term returns. The index only delivered 6% compounded annual stock returns in the past five years. Long-term annualized returns haven’t been much better.

However, if you are looking for some long-term outperformance, here are two value-priced stocks to buy in the second half of 2024.

Cenovus: A cyclical set for cash returns

Created with Highcharts 11.4.3Cenovus Energy PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Cenovus Energy (TSX:CVE) is not a typical stock pick for the long term. It is an energy stock. However, it appears to have some strong catalysts for the second half of the year and beyond.

Cenovus is one of Canada’s largest integrated energy companies. It has a mix of long-life oil assets that are complemented by a portfolio of refinery operations across North America.

The company is just hitting its stride with its refinery business after some tough years. Likewise, with oil sitting over US$80 per barrel, it is generating substantial free cash flow. Cenovus has been using that cash to reduce its long-term net debt target of $4 billion.

It is likely to hit this target in the back half of 2024. Once it does, it plans to return all its spare cash flow to shareholders.

Cenovus is known for its strong dividend growth, special dividends, and share buybacks. Shareholders could see some nice upside as they start to collect more income and value from this stock.

With a 2% dividend yield and a price-to-free cash flow ratio of 7.4 times, Cenovus looks like an attractive purchase today.

Calian: Steadily growing and undervalued

Created with Highcharts 11.4.3Calian Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

If you are looking for a value play in 2024, Calian Group (TSX:CGY) looks to be an attractive buy. If you look at its stock, it hasn’t been pretty. Its stock is down -5% in 2024 and -12% over the past 52-weeks.

The stock is starting to look extremely cheap. Calian has a diversified and resilient mix of businesses in healthcare, training, cybersecurity, and advanced technologies. It is a major contractor to governments and institutions.

It has delivered high-teens growth in revenue and earnings before interest, tax, depreciation, and amortization (EBITDA) over the past five years. Recent acquisitions could help support +30% EBITDA growth 2024. Margins have progressively been getting better, and it is benefiting from cross-selling opportunities across its platform.

This stock only trades for 10 times earnings. The company has been buying back stock here. With an 8% free cash flow yield and a 2% dividend yield, it looks attractively valued at today’s price. If it can continue to hit its targets, this stock could start turning around in the back half of 2024.

Should you invest $1,000 in Ballard Power Systems Inc. right now?

Before you buy stock in Ballard Power Systems Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Ballard Power Systems Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Robin Brown has positions in Calian Group and Cenovus Energy. The Motley Fool recommends Calian Group. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average Canadian TFSA and RRSP at Age 60

Many Canadian retirees have tens of thousands invested in ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

dividend growth for passive income
Investing

5 Canadian Growth Stocks to Buy and Hold for the Next 15 Years

These Canadian stocks have tremendous long-term growth potential, making them five of the best investments you can buy and hold…

Read more »

Man holds Canadian dollars in differing amounts
Stocks for Beginners

Cash Is King? Think Again During Today’s Market Dip

Sure, cash is great, but during a market dip investors may want to consider using some of the cash to…

Read more »

grow money, wealth build
Stocks for Beginners

How I’d Build a $15,000 Portfolio for Income and Growth With Canadian Value Stocks

Looking for some Canadian value stocks to buy without breaking the bank? Here's a trio to consider buying this month.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Investing

3 Canadian Value Stocks I’d Hold in My TFSA Through Market Volatility

Given their healthy growth prospects and discounted stock prices, these three value stocks would be ideal additions to your TFSA.

Read more »