Special Free Report From The Motley Fool

5 Cheap and Good Stocks for 2020

Fellow Investor,

Thanks for taking the time to access my special investor’s report. My name’s Iain Butler and I’m the Lead Advisor of a service called Motley Fool Stock Advisor Canada.

In just a moment, I’ll show you how to claim a heck of a deal on a subscription, should you be curious. Stock Advisor Canada is full of vital information and investment ideas that I believe could help you significantly grow your wealth over the long term. It takes just a few minutes to read each monthly issue, but it could prove to drastically change your financial future.

But first, let’s look at 5 companies trading at “cheap” (in our mind) valuations that all look to us to be good bets for investment dollars right now.

Here are the companies that made our list. We think each boasts significant long-term growth prospects (and some even currently pay hefty dividends). In other words, these are companies that could hit the ‘sweet spot,’ potentially setting you up for years of capital gains and a steady stream of income!

Let’s get started…

So, without further ado…

Stock #1: Bank of Nova Scotia (TSX: BNS)

Company snapshot

Market Cap: $88B
Current Dividend yield: 5%
Recent Price: $72.29
Data as of: 1/16/2020

A generation of Canadian investors have made wonderful returns by investing in Scotiabank and the rest of the Canadian banks. But you sure wouldn’t know it by the broad-based negativity that tends to swirl around this collection these days, with Scotiabank serving as ground zero, in our opinion.

And now, with the U.S. president toying with Mexican tariffs, and Scotiabank having rather significant Mexican operations, negativity has turned to outright hatred for this company and its stock. Today, Scotiabank sports a financial crisis-like valuation, which is rather unbelievable given we’re nowhere close to a financial crisis-like situation.

With this valuation in hand, losing money on an investment in Scotiabank over the next five years will require a scenario to take hold that’s unlike any other that’s occurred since the mid-90s. At least, as that’s as far back as our data goes.

Presently offering a roughly 5% dividend yield, and a price/book multiple that our analysis indicates should not go any lower than it is… the stock today meets the textbook definition of a defensive setup. Considering the bank’s valuation, in our opinion, downside is extremely limited. Patience is key, but if you’re looking for a position that’s likely to navigate through choppy waters better than most, Scotiabank is your ride.

Stock #2: Fairfax Financial (TSX: FFH)

Company snapshot

Market Cap: $16.5B
Current Dividend yield: 2.1%
Recent Price: $616.71
Data as of: 1/16/2020

Fairfax, as an insurance company, runs a fairly straightforward business. As you know, severe weather leads to property damage, and one doesn’t have to pull too hard on the thread before insurance companies become involved! When it comes to flood-related property damage, insurance companies are on the front line. After all, that’s why they exist.

Fairfax is currently enjoying mid-single-digit price increases on the back of the harsh weather environment that’s existed for the past couple years. It’s something that we think should lead to improved profitability in the years ahead as conditions normalize.

Insurance, though, is but one piece of this and every insurance company. When it comes to Fairfax, while we want to see a profitable insurance business, the investment portfolio tends to carry more sway. On this front, in our minds, significant potential exists. For one, the portfolio is loaded with liquidity in the form of cash and short-term U.S. Treasuries. In addition, we’re rather fond of several of the largest equity positions in the portfolio.
Tossing a blanket over it: we have an insurance business that we think is poised to benefit from the current pricing environment, and boasts an investment portfolio that probably doesn’t get the recognition it deserves.

To put it another way, with Fairfax, we have a relatively stable underlying business that’s combined with somewhat of a coiled spring of an investment portfolio. It’s trading at a highly attractive valuation given the potential. All in, it’s a situation that you should feel very good about buying and not thinking about for the next five years.

Stock #3: Hardwoods Distribution (TSX: HDI)

Company snapshot

Market Cap: $359M
Current Dividend yield: N/A
Recent Price: $16.84
Data as of: 1/16/2020

Hardwoods, as you might guess, distributes hardwood lumber, plywood, medium density fiberboard, melamine, particleboards, and specialty products to the industrial retail markets in North America. Yawn fest, right?

Not so fast. We think this is a great little business. More importantly, though, for our purposes, it’s a great little business that in our minds has been entirely mistreated by the market. This assault has come on a couple of fronts. First, a U.S. trade beef against Chinese hardwood plywood caused some to flee. The thing is, from the get-go, it was foreseeable this would only be a temporary issue. Margins have been impacted, but we see normalization is already on the horizon. A return to more normal levels in the quarters (yes, quarters) ahead will have this matter firmly in the rear-view mirror.

For this, we’re being asked to pay multiples that are well off the highs we’ve seen over the last 5 years. An only slightly more supportive macro environment could lead to big gains from here on multiple expansion alone. In our opinion, it’s an opportunity not to be missed.

Stock #4: Magna (TSX: MG)

Company snapshot

Market Cap: $21 billion
Current Dividend yield: 2.7%
Recent Price: $69.42
Data as of: 1/16/2020

A Canadian company that we believe probably doesn’t get nearly the recognition it deserves for its presence in the global auto industry, Magna and its stock have come under significant pressure in recent months in what has been a difficult spell for all things auto. Admittedly, we shared some of the broadly held concern as it pertained to the North American trade situation (you know, the former NAFTA). Even though the company has a global footprint, North American operations are very material. Seemingly, though, we’re past all of this and the adverse scenarios that Magna faced no longer exist.

The thing is, the apparent end of Magna’s troubles really hasn’t had any impact on the stock. This remains a stock market that’s not keen on auto anything, and this seems like an opportunity to us. There is a valuation case here that’s increasingly just too darn attractive to pass up in our view.

At its current valuation, what we have here is a tremendous company at a very fair price. Somebody named Warren Buffett once said something about these kinds of situations. To paraphrase, “Buy them.”

Stock #5: Pulse Seismic (TSX: PSD)

Company snapshot

Market Cap: $99.5 million
Current Dividend yield: N/A
Recent Price: $1.85
Data as of: 1/16/2020

We believe that oil and gas will continue to play a significant role in the global energy space for decades to come. And yet, we find it a real challenge to invest in companies that produce these resources, so we tend to focus our attention on other industry players to gain exposure. Pulse Seismic is a perfect example of a company that we feel will continue to benefit from the ongoing production of oil and natural gas in Western Canada, yet it offers a business model that is far more dependable than that of your typical exploration and production (E+P) company.

As its name suggests, Pulse Seismic owns and manages a library of seismic data that pertains to, and is integral to, oil and gas exploration and development in Canada. What’s more, Pulse is now the largest owner of seismic data in the whole country—as Pulse recently announced that It had completed the acquisition of Seitel Canada, which had been the other significant owner of seismic data in the nation. So this move essentially doubles the amount of 3D data in Pulse’s library and nearly doubles the 2D data!

While Pulse Seismic’s regular quarterly reports haven’t been all that fun in recent, well, years, the special announcements that the company has put forward certainly have been. At a time when the rest of the industry has turtled, Pulse has leveraged its financial prudence in recent years to position itself, in our opinion, to be a significantly improved company once the current malaise passes.

That’s the key to this whole scenario, and we think patient investors are likely to be rewarded.

Now, let’s discuss that special offer I mentioned at the beginning.

Because if it’s high-growth, high-return stocks you’re looking for, my market-doubling Stock Advisor Canada service might be just right for you.

We’ll even let you try Stock Advisor Canada with a full membership-fee guarantee, which lets you ‘test-drive’ everything we have to offer, then get your money back if you’re not delighted with what you find.

It’s true. Let me quickly bring you up to speed on the details…

LIMITED TIME OFFER: Access Canada’s Best Investment Research WITH NO RISK TO YOUR MEMBERSHIP FEE for 30 Days

As you may know, every day at The Motley Fool Canada, I scour the market for the very best shares… Shares that can earn you multiples of your original investment.

You don’t need ME to tell YOU that a few smart investments now could even mean an extra ten, twenty, thirty thousand dollars a year in your retirement.

Getting in on the right stocks at the right time can change your whole future… leaving you in position to really enjoy your golden years the way you always hoped.

Money to live the way you want… A holiday house… trips to exotic countries overseas… spoiling the grandkids… maybe even helping your kids get their foot on the property ladder…

Heck, you might even be able to quit the rat race a decade early!

The only thing standing between you and this kind of comfortable retirement is knowing exactly which shares to buy.

That’s where I come in.

As I’ve mentioned, I’m the lead advisor of what is arguably Canada’s most popular investing service…

It’s called Motley Fool Stock Advisor Canada. In the last few years, we’ve led thousands of investors just like you to winners such as…

  • Shopify, TSX: SHOP… up 1,593%
  • Solium Capital, TSX: SUM… up 167%
  • CGI Group TSX: GIB.A… up 154%
  • MTY Food Group, TSX: MTY… up 96.5%

Not to mention U.S.-listed winners such as Veeva Systems (Nasdaq: VEEV), up 422%… and MercadoLibre (Nasdaq: MELI), up 574%!

In all, Stock Advisor Canada has more than doubled the return of S&P/TSX Composite Index, just since we opened the doors back in 2013.

That’s why I’m so pleased to extend you an invitation to join us right now. And to make you feel truly welcome, I’m even going to give you a limited time, exclusive discount!

Here’s the very best part of this offer: Your subscription to Motley Fool Stock Advisor Canada is backed by our ironclad 30-day membership fee-back guarantee.

In other words, you get a full 30 days to review everything Stock Advisor Canada has to offer you. You get access to every BUY recommendation and our full research archive. You’re welcome to put money on any of the stocks, or simply paper trade them first.

Then after 30 days, if you’re not convinced that Stock Advisor Canada can make a real and lasting difference to your wealth, simply get in touch with our friendly customer service team and we’ll refund you every cent of your membership fee.

It’s really that simple and easy. At the end of the day all you’ll sacrifice is a few minutes of your time looking through our research.

But I can say with all confidence, I believe this service WILL likely make you money for decades to come.

That’s why I want to invite you to get in on this tremendous wealth-building adventure today.

Sign up now and you can start enjoying these exclusive benefits of membership right now:

  • Two new stocks pick each month – with every single stock a high-conviction play delivered to your inbox like clockwork, month in and month out.
  • Exclusive access to our members-only website, where you’ll find our “Best Buys Now” stocks and every other Motley Fool Stock Advisor Canada stock pick we’ve ever recommended.
  • An online scorecard that lets you see the performance of ALL our stock tips, in one convenient place.
  • Breaking alerts by email with important market news that impacts your portfolio, including weekly updates on our picks.
  • PLUS, 24/7 access to our exclusive member-only online discussion boards.

And did I mention your “welcome, new member” discount?

Usually a subscription to Stock Advisor Canada costs $299 a year. That’s already dirt cheap for the kind of in-depth research and high-potential recommendations you get.

But since you’re a brand new reader, if you act right now, you can lock in a membership to Stock Advisor Canada for just $99…

Click here now to secure your subscription at this low, low price.

Meanwhile, you can rest assured your 100% protected by our 30-day, no questions asked, membership fee-back guarantee of your subscription fee.

That’s right. As I’ve mentioned, you’re entitled to take a FULL 30 DAYS to have a good look at everything Motley Fool Stock Advisor Canada has to offer.

In other words, you have the chance to see every recommendation ever made inside Stock Advisor Canada – names, codes, the full investment analysis for each…

AND see for yourself what Stock Advisor Canada members really think of the service, with ‘no holds barred’ discussion on our proprietary message boards…

Then get all your membership fee back if you so choose.

All you have to do is let our friendly customer service team know that you’d like to cancel any time within your first 30 days.

You’ll receive every cent of your membership fee back. No hassle, no fuss.

But there is just one catch…

If you’d like to take advantage of this very special offer, we need to hear from you right away.

Your membership offer – complete with this special low price – is available for just a short time only. Blink and you’ll miss it. And who knows when this opportunity will come again?


Yours Sincerely,

Iain Butler, CFA
Lead Advisor, Motley Fool Stock Advisor Canada

P.S. Keep in mind: This NO RISK to your membership fee TRIAL lets you sample everything Stock Advisor Canada has to offer and potentially pay nothing at all. Simply click here to get started and lock in your “welcome, new member” special discount.

Disclosure: Fool contributor Taylor Muckerman owns shares of MercadoLibre, Shopify, and Veeva Systems. David Gardner owns shares of MercadoLibre. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of MercadoLibre, MTY Food Group, Shopify, and Veeva Systems. Iain Butler owns shares of MongoDB and Shopify. Returns as of Jan. 16, 2020.