No matter how much experience you have with investing, everyone understands the most basic concept: you want to buy stocks as low as possible and sell them as high as possible. That’s why looking for Canadian value stocks to buy is a solid strategy.
Value stocks are companies that are trading cheaply and below their intrinsic value. By finding top-value stocks, investors have the opportunity to buy the stock while it trades undervalued and then hold the stock until it recovers, eventually selling it for a profit.
However, as simple as that strategy sounds and as opportunistic as it can be, it’s essential to ensure the stocks you’re buying still have high-quality operations and are worth owning for some time.
It’s not uncommon that some of the worst-performing stocks on the market are also the cheapest. And these struggling businesses may never recover in value.
So, it’s not enough to just buy any stock on the market that’s trading cheaply. In fact, you’re actually much better off buying a stock that may have less of a discount than others but is far more reliable.
So, with that in mind, if you’re looking for top Canadian value stocks to buy this November, here are four of the best trading at compelling valuations.
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Two top growth stocks Canadian value investors can buy now
Typically, older, more well-established stocks with slower growth potential are what many investors think of when they hear value stocks. However, even high-quality growth stocks with significant long-term potential can be value stocks if they trade cheaply enough.
That’s why I think two of the best Canadian value stocks to buy now are goeasy (TSX:GSY), the specialty finance stock and Aritzia (TSX:ATZ), the rapidly growing fashion retailer.
goeasy is one of the best growth stocks in Canada. Not only does it consistently expand its operations and increase its sales and profitability, but it’s also done so rapidly while managing its risks well.
Meanwhile, Aritzia has also been rapidly expanding its operations. It continues to open new stores, especially south of the border, while also seeing more demand on its e-commerce platform.
Furthermore, with nearly double the stores in Canada as it has in the U.S., Aritzia has a significant runway for growth in the coming years.
Therefore, while goeasy trades at a forward price-to-earnings (P/E) ratio of 9.5 times today, below its five-year average of 10.6 times, and while Aritzia trades at a forward P/E ratio of 22.7 times compared to its five-year average of more than 36.6 times, these are easily two of the best Canadian value stocks to buy now.
Two top defensive stocks you can buy undervalued
In addition to high-potential growth stocks trading cheaply, investors can also find high-quality, highly reliable defensive stocks to buy cheaply as well, such as Jamieson Wellness (TSX:JWEL) and Nutrien (TSX:NTR).
Jamieson produces vitamins, supplements, and natural health products, helping people improve their health and wellness with trusted, high-quality ingredients. This not only makes it a defensive and reliable business since many vitamins and supplements are essential, but it’s also a top growth stock with plenty of long-term potential.
For years, Jamieson has demonstrated an ability to grow not only organically but also through acquisition and international expansion.
Nutrien, however, is a global leader in agricultural products, supplying farmers with essential crop nutrients like potash, nitrogen, and phosphate to help increase crop yields and feed a growing world population. Furthermore, Nutrien also has a massive retail network and provides digital tools and services to support farmers’ productivity and sustainability efforts.
Therefore, since both of these high-quality stocks trade cheaply, they are two of the best Canadian value stocks to buy now.
For example, Jamieson trades at a forward P/E ratio of 19.7 times today, considerably cheaper than its five-year average of 22.5 times. Meanwhile, Nutrien’s forward enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio of 6.9 times is also below the 7.6 times average forward EV/EBITDA ratio it’s had since its inception in 2018.
Therefore, while these two defensive stocks trade undervalued, they are easily two of the best Canadian value stocks to buy now.
