While the equity indices continue to trade near all-time highs, several stocks are priced at reasonable valuations, positioning them to deliver outsized returns to shareholders. In this article, I have identified two cheap Canadian stocks you can buy for less than $20 in November.
Source: Getty Images
Kraken Robotics stock
Valued at $540 million by market cap, Kraken Robotics (TSXV: PNG) is a marine technology company that designs, manufactures, and sells software-centric sensors, batteries, and underwater robotic systems for unmanned use in military and commercial operations.
In the last 10 years, Kraken Robotics has increased its sales at an exceptional compound annual growth rate of 61.5%. During this period, its adjusted earnings have risen by 22% annually. Since October 2019, PNG stock has returned close to 200% to shareholders. The company went public in early 2015 and has delivered cumulative gains of 1,188%.
In the last 12 months, Kraken has reported revenue of $92 million, up 117% year over year, which indicates its growth story is far from over.
Analysts tracking the stock expect revenue to rise by 37% to $95.4 million in 2024 and by 21.8% to $116.2 million in 2025. Its adjusted earnings per share is forecast to expand from $0.03 in 2023 to $0.07 in 2025. Priced at 29 times forward earnings, Kraken stock is reasonably valued, especially if it can continue to report consistent profits.
Magellan Aerospace stock
Valued at a market cap of $600 million, Magellan Aerospace (TSX: MAL) designs, engineers, manufactures and sells aero engine and structure components for aerospace markets in Canada and other international markets. It manufactures engine housings, gearboxes, front frames, and fan cases, among other products.
Recently, Magellan announced it signed long-term agreements with Pratt & Whitney, an RTX business. These contract renewals cover the supply of complex castings used on several legacy and new engine programs, providing investors with revenue visibility. Magellan and Pratt & Whitney have a long-standing business relationship that spans roughly six decades.
Due to the complexity of its products and the regulations surrounding the airline sector, Magellan enjoys a competitive moat. In May, Magellan announced it would provide Black Brant vehicles and hardware to Peratron in support of the NASA Sounding Rocket Program. Under the terms of the agreement, Magellan will supply NASA’s annual requirement, which could help it generate revenue of up to $75 million.
In the first six months of 2024, it derived 65.6% of revenues from commercial markets and the rest from defence markets. Magellan’s sales in the U.S. increased by almost 17% year over year in the second quarter (Q2) due to increased sales for defence aircraft and wide-body aircraft parts, higher helicopter part revenue, higher casting product revenue, and a strong U.S. dollar.
Analysts tracking the TSX stock expect sales to rise from $880 million in 2023 to $1.08 billion in 2025. Its adjusted earnings are forecast to expand from $0.16 per share in 2023 to $1.02 per share in 2025. So, priced at 10.2 times forward earnings, MAL stock is cheap and trades at a discount of almost 40% to consensus price target estimates.
