雅虎香港財經 3 TSX Stocks That Are Too Cheap to Ignore!
Written by Kay Ng at The Motley Fool Canada
Are you shopping for value stocks in today’s environment? Here are three TSX stocks that are too cheap to ignore. Check them out to see if they fit your investment portfolio.
Like gold and silver? WPM stock is dirt cheap
Wheaton Precious Metals (TSX:WPM)(NYSE:WPM) stock tends to trade at a premium to its precious metal mining peers. There are multiple reasons for its higher multiple. The company’s business model enables it to enjoy high margins. Its cash flows are, therefore, also higher quality.
Wheaton Precious Metals doesn’t operate any mines. Instead, it has come into agreement with 23 operating mines to buy primarily gold and silver at preset low prices. In exchange, it pays those mines a set amount to help them develop the mines.
To illustrate, in the first quarter, WPM sold gold at an average price of US$1,870 versus cash costs of US$477 per ounce. Similarly, its average realized silver price was US$24.19 versus cash costs of US$5.10 per ounce.
Consequently, the company’s operating costs are low and predictable. For example, WPM’s trailing 12-month (TTM) operating expenses were only 5.3% of revenues, leading to a high operating margin of 50.7%. WPM has 13 development projects (streams) underway, which can boost its cash flow significantly.
At about US$35 at writing, WPM stock trades at about 17.9 times cash flow. The analyst consensus 12-month price target suggests that’s a substantial discount of approximately 40%. The TSX stock is simply too cheap to ignore! It also yields roughly 1.7% to add to total returns.
Oil stocks are also cheap
The WTI oil price dropped below US$100 per barrel at writing. That is a psychological threshold for investors. What about the Canadian Western Select? It’s at about US$94 per barrel. Whitecap Resources (TSX:WCP) stock dipped more than 7% yesterday in reaction to volatile energy prices.
At $8.54 per share, the oil stock trades at a valuation of about 3.1 times cash flow. That’s a basement price! The company is gushing free cash flow at the still-high oil prices, which is why the energy stock’s monthly dividend is about 88% higher year over year. It now offers a decent dividend yield of 4.2%.
Its dividend is covered by earnings and cash flow. For instance, its TTM payout ratio is close to 6% of earnings and 21% of free cash flow. I suppose its volatility makes it challenging to invest in. In any case, the oil stock could be a great buy on the dip to its 50-week simple moving average.
A cheap bank stock for safe, juicy dividends
Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is an undervalued stock. The big bank stock is more exposed to emerging markets, which is why it tends to trades at a lower valuation than its peers. Emerging markets can provide higher economic growth, but developing market loans are also riskier. However, it doesn’t change the fact that BNS stock has is core business in Canada and pays out safe dividends on a sustainable payout ratio of about 48%.
At $74.76 per share at writing, it trades at about 8.9 times earnings, which is more than 20% cheaper than its normal long-term valuation. Investors who seek passive income can start nibbling the stock for an initial juicy yield of 5.5%.
After buying cheap stocks, be patient. Don’t be easily shaken out of your shares, particularly if you get juicy dividends from the likes of BNS stock.
The post 3 TSX Stocks That Are Too Cheap to Ignore! appeared first on The Motley Fool Canada.
Should You Invest $1,000 In The Bank of Nova Scotia?
Before you consider The Bank of Nova Scotia, we think you’ll want to hear this.
Our S&P/TSX market beating* Stock Advisor Canada team just released their timely Best Buys Now to Stock Advisor Canada members, and we’re giving away one of our top 5 “Best Buys Now” stocks for free today.
Want to see if The Bank of Nova Scotia made our list? Get started with Stock Advisor Canada today to receive all 5 of our Best Buys Now, a fully stocked treasure trove of industry reports, two brand-new stock recommendations every month, and much more.
See Our Best Buys Now * Returns as of 6/21/22
More reading
The Motley Fool recommends BANK OF NOVA SCOTIA. Fool contributor Kay Ng has no position in any of the stocks mentioned.
2022
