The holiday season is right around the corner, and as the Canadian consumer looks to open up their wallet in one of the biggest seasons for retail, the so-called Santa Claus rally may have one just bump to give the stock market before the page turns on a new year.
Indeed, it’s been a great year to be a stock investor. And while the year’s gains seem less likely to be topped come the new year, I think there are intriguing value options out there that may not be nearly as bid up as the market, specifically the S&P 500, which I view as getting expensive, especially compared to the TSX Index.
Indeed, just because the markets as a whole are expensive does not mean that there aren’t undervalued names lurking under the radar. Indeed, some of the best value bets may actually be large-cap names hiding in plain sight. And in this piece, we’ll check out two such names that are not at all overheated and are potentially extremely undervalued. So, if you’re searching for relative value in a hot market, the following names may be worth stashing on your December shopping list!
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Quebecor
First, we have a Quebec-based telecom firm, Quebecor (TSX: QBR.B), which is also now the proud owner of discount wireless carrier Freedom Mobile. Indeed, Freedom Mobile may be best known as a carrier that offers competitive prices. However, it still has a way to go on the network quality front if it’s to really disrupt the Big Three telecom titans as they duke it out for the national wireless crown.
In short, Quebecor is an underdog but one that I think is worth betting on as the firm looks to take on national behemoths that are magnitudes larger than its size (Quebecor is a mere $7.48 billion company). As Freedom continues investing in its 5G network, I think that more Canadians may gravitate towards the offering in a bid to save a few bucks per month.
Indeed, inflation may have been tamed, but the hunger for solid value propositions has not faded—not in the slightest. With a ridiculously low 10.3 times trailing price to earnings (P/E) and a nice 4.04% dividend yield, I’d look at the stock closely after its latest November correction, one that I think is overdone.
Coca-Cola
Speaking of corrections, Coca-Cola (NYSE: KO) stock is still just nearly 13% from its all-time high. Indeed, there’s a pretty strong level of support in the $62-63 range, making the recent dip seem like an opportunistic entry point. The stock boasts a nice 3.04% dividend yield and goes for 26.5 times trailing P/E. Indeed, that’s a modest dividend for a rather expensive price.
While Coca-Cola’s controversial artificial intelligence (AI) advertisements may not hit the spot for many (I must say that I was not a big fan of the holiday ad), I see many areas where the firm can grow and move on from its recent pullback.
Perhaps new products and targeted ads may be able to bring back some of the fizz to KO shares. Either way, you’re getting a legendary consumer staple that’s worth venturing south of the border for while it’s still down. As long as Coke pulls back on the AI ads, I think its marketing campaign can hit the ground running again.
