Investors’ optimism over the improvement in economic activities due to easing restrictions and expansionary monetary and fiscal policies has driven the Canadian equity markets higher this year. However, a few companies have failed to participate in this rally and are trading at attractive valuations. So, if you are ready to invest, here are four cheap Canadian stocks that you can buy right now.
The resurgence of COVID-19 has weakened air travel bookings, thus putting pressure on Air Canada (TSX:AC), which has underperformed the broader equity markets this year. Also, the company is trading over 50% lower from its pre-pandemic levels. However, I believe the steep correction provides an excellent buying opportunity for long-term investors, given its healthy growth prospects and attractive forward price-to-sales multiple of 0.7.
Amid the widespread vaccination, the Canadian government has removed some harsh travel restrictions, which could boost passenger demand in the coming quarters. Notably, Air Canada has resumed its service to various destinations worldwide. It plans to strengthen its cargo division by adding new retired passenger planes amid rising demand. Further, Air Canada’s liquidity of $9.8 billion and cost-saving initiatives augur well with its growth prospects.
Cineplex (TSX:CGX) is another stock that has failed to recover from its pandemic lows. It is still trading at over 60% discount from its January 2020 levels. Its forward price-to-sales multiple stands at an attractive 0.6. Meanwhile, with the easing of restrictions, the company has reopened all its screens from July 17.
The implementation of VenueSafe measures and a movie subscription program called CineClub and the postponement of movies from the last year to this year could boost foot traffic, thus driving its financials in the coming quarters. Also, its cost-cutting initiatives and healthy financial position could aid the company to bounce back strongly. So, Cineplex could be an excellent addition to your portfolio.
Third on my list is Absolute Software (TSX:ABST)(NASDAQ:ABST), which has lost around 44% of its stock value from its recent highs. Its mixed second-quarter performance appears to have dragged the company’s stock down. However, I am upbeat on the stock amid rising spending on cybersecurity due to a secular shift towards remote work and learning culture.
Meanwhile, Absolute Software focuses on enhancing and extending its platforms to expand its customer base and drive revenue per customer. It recently acquired NetMotion Software, which broadened its product offerings and strengthened its competitive positioning. Absolute Software also pays a quarterly dividend, with its forward yield currently standing at 2.29%.
My final pick is Aurora Cannabis (TSX:ACB)(NYSE:ACB), which has lost 64.2% of its stock value from its February highs. The delay in cannabis legalization at the federal level has put pressure on the cannabis sector, including Aurora Cannabis. Meanwhile, the company reported a mixed fourth-quarter performance on Tuesday. Its top line missed analysts’ expectations amid weak recreational sales, while its adjusted EBITDA losses and cash burn improved year over year.
With its medical cannabis sector delivering over 60% of gross margin, Aurora Cannabis has allocated more resources to the division. It also focuses on increasing its presence in the international market, including Germany, France, and Israel. Meanwhile, it is also working on launching premium and higher-THC content products to boost its recreational cannabis sales. Further, the company has also taken several initiatives to deliver $60-$80 million in savings over the next 18 months. So, given its healthy growth prospects, I am bullish on Aurora Cannabis.
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.
The Motley Fool recommends Absolute Software Corporation and CINEPLEX INC. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.