The best times to invest in stocks are when you have some spare cash available. The sooner you can get your money working for you, the sooner it can start to compound and multiply. Compounding takes time and patience; the earlier you can start investing, the better.
The great thing about investing right now is that there are so many options and avenues to invest in stocks. Today, commissions are cheap (and, in some cases, free). It is easier than ever to buy and sell a stock.
With fractional shares available, you can even buy stakes in stocks that have substantial price tags (such as Constellation Software with its $4,265 stock price). If you have $2,000 to invest this month, here are two value stocks I would consider adding right now.
A value-priced dividend stock
Real estate stocks have started to see a nice recovery as interest rates have begun to decline. One stock set for a recovery is Minto Apartment Real Estate Investment Trust (TSX:MI.UN). It operates a portfolio of high quality, well-located apartment properties across Quebec, Ontario, and Alberta.
After the pandemic, the REIT had some challenges due to an elevated level of variable-rate debt. It found a new management team that sold off non-core assets, de-levered, and focused on per-unit returns. Today, its balance sheet is in a great position.
Given strong population growth, demand for its units remains strong. Population growth in Canada remains a significant long-term tailwind.
Minto’s average rental rate remains 11% below market rates. It has a considerable organic growth opportunity on lease turnover/renewal.
Despite its great assets, Minto is one of the cheapest apartment REITs in Canada. With a 3% dividend yield and a great valuation, it looks like a solid income stock to buy today.
A value-priced TSX tech stock
Enghouse Systems (TSX:ENGH) has not performed well in recent years. Its stock is down 50% in the past three years! During the pandemic, this company saw a massive rise in demand (and its stock price) for its virtual communications software. However, demand declined as quickly as it rose.
This somewhat shocked the market. Revenues normalized with demand, and the market didn’t like that. Fortunately, there are good signs the business is recovering.
Enghouse generates a lot of cash from its business. It has been deploying this into high-returning acquisitions. However, it still has a considerable pile of net cash (nearly $260 million).
Many competitors in its industry are becoming distressed. This means profitable Enghouse could start taking market share. Likewise, the down market creates opportunities for better-priced acquisitions.
Management has indicated they would be more aggressive in buying back stock. Right now, Enghouse shares trade at their cheapest valuation in many years. Buybacks would certainly be a good way to return value to shareholders.
If you are to invest in Enghouse stock, you might need to be a bit of a contrarian. However, there are signs a recovery could be coming. Enghouse trades with a 3.4% dividend yield. Its dividend has risen by a 19% compounded annual growth rate over the past five years! Overall, this stock is a nice bet on an undervalued, income-yielding tech stock.
