Investing in stocks solely based on their low dollar value can be a risky strategy, as the price of shares alone does not reflect the company’s potential for growth or underlying value. Moreover, there could be several reasons why a stock is trading at a low price, and it could indicate issues within the company. However, this also doesn’t mean that all low-priced stocks are bad investments. For instance, many Canadian stocks with solid fundamentals and significant growth prospects are trading below $20.
With this backdrop, let’s look at two no-brainer stocks to buy with $20 right now.
StorageVault Canada
StorageVault Canada (TSX: SVI) is a dominant player in the Canadian storage industry. It owns 218 locations and over 12.2 million square feet of rentable storage space across 106,597 units. The company’s strategy of owning and operating storage facilities in Canada’s top markets and focusing on creating a network of multiple stores augurs well for growth. This network is further enhanced by complementary services such as portable storage units and records management, enabling StorageVault to capitalize on economies of scale.
The Canadian storage market is experiencing steady demand due to the growing population and smaller living and workspaces. This favourable market environment has allowed StorageVault to achieve significant financial growth. In 2023, the company’s revenue increased by 10.3%, while its net operating income (NOI) grew by 10%. Despite challenges such as slow home sales and a decline in renovation activities, StorageVault reported same-store revenue and NOI growth of 3.9% and 3.6%, respectively, during the first half of 2024.
StorageVault’s growth strategy hinges on acquisitions and expanding its existing facilities and service offerings. Since 2015, the company has completed acquisitions totalling over $2.39 billion. These acquisitions have significantly increased the company’s rentable space, positioning it to further enhance its revenue streams. Additionally, StorageVault’s emphasis on increasing rent per square foot is expected to support its profit margins.
Looking forward, StorageVault is focused on maximizing free cash flow through continued revenue and NOI growth. The company is also taking measures to reduce costs, which will support its earnings and share price.
WELL Health
Investors could consider buying WELL Health (TSX: WELL) stock for under $20. It is a leading digital healthcare company and one of Canada’s largest owner-operators of outpatient medical clinics. The company is growing rapidly and delivering solid financials. While WELL Health consistently delivers substantial revenue and profitable growth, its stock is trading at the next 12-month enterprise value-to-sales (EV/sales) multiple of 1.6, which is near an all-time low.
The combination of WELL Health’s solid growth and low valuation make it a compelling investment. Further, the momentum in WELL Health’s business will likely be sustained, reflecting higher omnichannel patient visits. Moreover, acquisitions will further accelerate its growth. In addition, WELL Health is optimizing its operations to boost organic growth and profitability. Also, it is prioritizing capital-efficient growth opportunities to increase cash flows, reduce debt, and minimize share dilution.
In summary, WELL Health is poised to deliver significant growth as it strengthens its market leadership in Canada and optimizes its operations. Moreover, the company is also investing in artificial intelligence technology to develop innovative products that will drive future growth.
