Just because the stock market is on a solid bull market rally doesn’t necessarily mean it’s going to end in tears, perhaps shortly. Undoubtedly, investors should definitely be asking themselves if above-average valuation multiples are worth paying and if they still stand to get a decent value per investment dollar. Indeed, even high-growth companies with hefty multiples can be a decent value if the fundamentals are improving, catalysts are arising, and the earnings growth narrative is getting more interesting.
Add the potential for fewer regulations and lower corporate taxation in the U.S. under a Trump administration, and it should be no surprise why many investors are flooding back into stocks on both sides of the border. Though value is getting harder to come by, especially in the U.S. tech sector, there is no shortage of relatively affordable options on the TSX Index.
In this piece, we’ll check out three such names that may still be appetizing to value investors, many of whom just can’t pay a premium for red-hot tech stocks that are fresh off double-digit (or, in some cases, triple-digit) gains in the past 12-18 months.
Sure, artificial intelligence (AI) is where most investors want to be these days, but let’s not neglect the companies that still stand to do well as the stock market and economy zoom higher going into the second half of the 2020s. Who knows? Perhaps the “Roaring 20s” could be the theme from here on out.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is a convenience store firm that’s built a lot of value through acquisition over the decades. The company’s ongoing pursuit of 7-Eleven’s parent company is poised to continue in 2025. And while 7-Eleven’s owner is exploring alternative options (including a potential U.S. IPO), I think Couche-Tard shareholders ought to hang in for the ride.
Arguably, missing out on buying 7-Eleven could be a good thing in the eyes of investors, especially since news of the initial deal sent the stock into a bit of a tailspin earlier this year. Either way, Couche-Tard has money to spend and a literal world full of opportunities to continue growing via mergers and acquisitions.
At just north of $81 per share and 21.6 times trailing price to earnings (P/E), ATD stock is way too cheap, given its wide moat, strong balance sheet, and proven strategy of growing via acquisitions.
As a relatively predictable, low-tech business that’s going into the new year in recovery mode, I’d strongly consider picking up a few shares. Time will tell if Couche-Tard ends up the new, proud owner of 7-Eleven.
Either way, I think the company is well-equipped for growth, regardless of which outcome it’s dealt in 2025. In the meantime, look for Couche-Tard’s managers to continue giving their all to make such a dream deal a reality. Whether that entails a richer bid remains to be seen. Either way, shareholders should put their trust in the legendary management team.
Spin Master
Spin Master (TSX:TOY) stock had a choppy year, ultimately going nowhere (up 1.75% year to date) as the firm pushed through industry headwinds. The company’s latest third quarter saw sales come up short. And with notable weakness on the digital front, it seems like Spin really needs a consumer resurgence for the holidays if shares are to start moving higher again.
Perhaps Canada getting a GST/HST holiday break on certain goods, which includes children’s toys, is an overlooked booster for the firm. Indeed, I view TOY stock as highly underrated for mid-cap investors willing to embrace the amplified volatility.
