The market didn’t end well last week, with markets around the world tumbling in response to several announcements. Whether it was bad news from Big Tech, or lower job growth, investors simply were not happy.
Add in some more negative earnings and a few stocks were seriously damaged. Two of those TSX stocks, however, might now offer an opportunity for higher growth – while also providing a dividend.
So let’s get into why these two at 52-week lows as of writing might be a great buy right away.
Magna stock
Magna International (TSX: MG) presents a compelling investment opportunity at its 52-week low, primarily due to its stable financial performance and attractive valuation metrics. Despite experiencing only marginal growth in sales, which were $11 billion for Q2 2024, the company managed to pay $134 million in dividends during the quarter indicating strong cash flow management and a commitment to returning value to shareholders.
Magna’s strategic focus on operational excellence, cost reductions, and new program launches positions it well for future growth. The car parts producer’s 2024 outlook remains largely unchanged, with total sales projected between $42.5 billion and $44.1 billion and an Adjusted EBIT margin expected between 5.4% and 5.8%.
Another factor enhancing Magna’s investment appeal is its valuation. With a trailing price-to-earnings (P/E) of 12.2 and a forward P/E of 7.8, Magna is trading at a discount compared to its historical averages and industry peers. The stock’s price-to-sales ratio of 0.3 and price-to-book ratio of 1.1 further underscore its undervaluation.
These metrics suggest that the market has not fully recognized Magna’s potential. Especially considering its robust financial position with total cash of $1.5 billion and significant free cash flow generation. The company’s 4.4% forward annual dividend yield also provides an attractive income stream for investors. Altogether, it’s looking like a great buy at these levels.
Peyto stock
Peyto Exploration & Development (TSX: PEY) stands out as an attractive investment as well at its 52-week low. The company’s valuation metrics are compelling, with a trailing P/E of 8.9 and a forward P/E of 8.6, indicating it is trading at a relatively low multiple compared to its earnings. Furthermore, its price-to-book ratio of 1 suggests that Peyto is valued just slightly above its book value, providing a margin of safety for investors.
Despite the recent volatility in natural gas prices, Peyto’s disciplined hedging strategy has helped maintain a strong realized gas price. Operationally, Peyto continues to deliver impressive results, particularly with its strategic acquisition of Repsol Canada Energy Partnership assets. The acquisition has not only boosted production volumes by 21% year-over-year but also enhanced well productivity by approximately 30% above Peyto’s recent drilling programs.
This operational efficiency is reflected in the company’s solid profit margins, with an operating margin of 62.1% and a profit margin of 34.5%. Furthermore, Peyto’s focus on optimizing its gas processing plants is expected to reduce operating costs by at least 10% by the end of 2024, further improving its financial performance.
Today, Peyto offers a substantial dividend yield of 9.2%, making it an attractive option for income-seeking investors. The company has a history of stable dividend payments, supported by its strong cash flow from operations. This totalled $204.6 million in the first quarter of 2024. Given its solid financial health, operational efficiency, and attractive valuation, Peyto stock is a compelling buy at its 52-week low.
