Every investor knows that some of the best investments you make will be long-term investments in top companies while they are trading undervalued. When you buy a Canadian value stock trading ultra-cheap, you have years of potential gains that you can make.
So, these are some of the best stocks you’ll always want to look for to consider adding to your portfolio.
One thing to keep in mind, though, is that stocks don’t trade cheap for no reason. When a business is sold off or trades at a lower valuation than its peers, it’s been valued that way by the market for a reason.
Once they start to rally, though, other investors notice, and this momentum is what will push these stocks to rally back to their fair value. That can happen quite rapidly, which is why you want to buy these stocks as soon as you find them and feel comfortable taking a long-term position, ideally before the rest of the market.
Sometimes, you may buy the stock early, and you’ll have to hold it for a little while before it rallies. But as long as these businesses you own continue to perform well and prove that they are worth more than how they’re currently valued, it will be worth it to hold on.
So with that being said, here are two of the best Canadian value stocks to buy before they inevitably rally.
A top Canadian media and entertainment company
If you’re looking for value stocks to buy today, there is no cheaper business than Corus Entertainment (TSX:CJR.B) to consider.
The Canadian value stock, which owns TV channels and streaming services, has been trading cheap for some time. As of Thursday’s close, it had a forward price-to-earnings ratio of just 6.6 times. That means Corus is only valued 6.6 times more than the net income it’s expected to earn this year — an extremely cheap valuation.
It’s not just its price-to-earnings ratio that makes the stock look cheap, either. Corus is cheap on a price-to-book and even price-to-cash flow basis. In fact, Corus is offering investors such an attractive deal that it’s one of the best options to buy today — even better than several recovery stocks.
But why is this stock so cheap? Corus has faced several problems in the past and today operates in an industry with a tonne of competition.
This can be alarming to consider. However, lately, the Canadian value stock hasn’t given investors any reason to doubt its long-term potential.
The company weathered the storm extremely well through the pandemic. Plus, it’s managed to improve both its operations and its financial position.
So, while the stock still poses some risks, they are slowly becoming less significant, making the deal Corus is offering even better of an opportunity for investors today. If you’re looking for a top Canadian value stock to buy today, Corus is one business that I recommend every investor consider.
A high-quality Canadian value stock
Another top business to consider buying today is Leon’s Furniture (TSX:LNF). Leon’s is a well-known furniture retailer with tonnes of stores across multiple banners throughout the country.
The Canadian value stock has built an incredible operation that doesn’t just include a portfolio of multiple stores, but ancillary businesses too such as a repair business and an insurance company.
Not only that, but Leon’s also owns a tonne of prime real estate locations where its stores are located. And in the past, management has said that the company could consider selling these properties and relocating stores if the economics made sense.
Besides that cherry on top, though, Leon’s core operations offer a tonne of potential to grow both its sales and its margins, which would reward investors massively. Not to mention it trades at a forward price-to-earnings ratio of just over 10 times.
And while that may not be as cheap as Corus, it’s still an incredible opportunity and makes Leon’s one of the best Canadian value stocks to buy today.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends LEONS FURNITURE.