There are plenty of great deals on the TSX Index that investors might wish to take advantage of right here, right now. Of course, a lot of new investors might want to wait for the next 10% correction in stocks before loading up. And while a market correction should always be on the radar, I also think that timing it is easier said than done. I still think there’s really no telling whether stocks will climb enough to make the next 10% drawdown less of a wipeout and more of a temporary setback or a toll on the highway to wealth you’ll need to pay.
Of course, if stocks were to go on to post a 20% gain from here before the next 10% dip, you’d still be better served by scooping up stocks today rather than waiting for that next 10% decline. And, of course, even if you were to encounter a correction, do you have the confidence to buy as much as you’d like before the inevitable rebound occurs? Either way, I think it makes sense to consider sticking with hard-hit value stocks.
Like it or not, there are good deals to be found, even if the market, as a whole, looks and feels risky or toppy. In this piece, we’ll look at where I think the discounts are this Halloween week.
Manulife Financial
Manulife Financial (TSX:MFC) shares may be closing in on new all-time highs of around $46 per share again, but I still view them as quite undervalued, especially considering they’ve been mostly range-bound for nearly a year. Personally, I’m more inclined to view the sideways action as a correction of sorts. Whenever a stock does next to nothing for an extended period, the fundamentals have a chance to catch up with the valuation.
Today, the stock looks primed for a breakout, with a modest 14.7 times trailing price-to-earnings (P/E) ratio and a lot going for it as we head into the next round of quarterly earnings. The name’s cheap and technically intriguing, going into the midpoint of the fourth quarter (Q4) of 2025.
With a 3.82% dividend yield and a lot of runway in the Asian business, it might be time to buy before MFC shares have a chance to enjoy another leg higher. With exceptional managers and several decent quarters under its belt, I wouldn’t bet against the cheap life insurer, especially now that investors have had ample time to digest the 2024 rally that powered MFC stock to generational heights.
Constellation Software
If you’re more of a dip-buyer, Constellation Software (TSX:CSU) stock seems like a screaming buy while it’s down close to 28% from its all-time highs. Of course, a number of concerning events, including the departure of Mark Leonard and the disruptive impact on AI, are potential yellow flags for some. And while the business is still likely to continue operating at a high level with that wonderful merger-and-acquisition growth model as it pursues deals in software, there’s a sense of unease around the name, especially given that the stock’s momentum has reversed rather suddenly and violently. Has Constellation really lost its way as its founder moves on?
While many folks view Mark Leonard as a “Canadian Warren Buffett” of sorts, I’m more than inclined to think that his resignation is more than priced into after a nearly 30% implosion. Furthermore, if you have confidence in Leonard, you should also have confidence in his successors, which, I think, will keep Constellation going strong for the next decade and beyond. If you can handle the volatility, I think it’s time to consider catching the falling knife while it’s cheap to do so.
