Don’t let the volatile start to September deter you from continuing to pick up shares of solid companies at fantastic discounts. Undoubtedly, the TSX Index is home to some pretty neglected value plays. And while many of them may not have as much growth promise as some of the Silicon Valley firms pouring tons of cash into generative and predictive artificial intelligence (AI), I think their other wonderful attributes are being modestly discounted by Mr. Market.
Indeed, Canada’s economy seems to be in a soft spot right now, and it’s quite unclear as to whether Bank of Canada rate cuts will fix things. Either way, the Canadian blue chips seem worth your attention here while expectations are muted and the potential for positive surprises (think better-than-expected consumer spending in the new year) becomes overlooked.
In this piece, let’s check out two promising blue-chip stocks that could have what it takes to be among the best in the TSX bargain bin this back-to-school season.
H&R REIT
The real estate investment trusts (REITs) have been off to the races in the past few weeks, thanks in part to enthusiasm over the recent rate cuts. Undoubtedly, the REITs have been weighed down by higher rates for way too long. H&R REIT (TSX: HR.UN) has arguably felt more of the pain than most others.
Despite offloading assets in an attempt to diversify away from office real estate, I still view H&R as an intriguing deep-value option for investors who are looking to make a big bang with every invested buck. At $11 and change per share, H&R REIT shares sport a 5.5% distribution yield.
While H&R’s distribution was cut in the heat of the pressures many years ago, I view the new payout as secure and subject to growth as H&R looks to get back on its feet. As one of the bigger beneficiaries from a lower-rate world, I’d not be afraid to pursue shares on recent strength. Over the past three months, shares have shot up more than 24%. This rally may just be the start of a sustained run to higher levels.
National Bank of Canada
National Bank of Canada (TSX: NA) is a number-six Canadian bank that’s finally starting to get the respect it deserves from investors. Despite its smaller size, the bank has found a way to outpace its larger rivals. And moving ahead, I find it can continue to gain ground over the behemoths in the space as it carves out its own distinct competitive advantages.
At 12.14 times trailing price to earnings (P/E), the bank still looks quite cheap, especially as it navigates a mixed Canadian economy that could see muted loan growth for some time. Though the 3.53% dividend yield isn’t massive by any stretch, it still looks growthy, perhaps growthier than its peers that are under more severe pressure this year.
At writing, shares of NA are sitting at fresh all-time highs while the rest of the market feels the shockwaves from the AI stock sell-off. Regardless of where stocks head next, NA stock is a name to keep on your watchlist this September.
