CM:CC - 4 Struggling Stocks to Buy at a Discount
2023-12-14 21:00:00 ET
Canadian investors may not have as much time as they thought when it comes to finding valuable stocks. Yet there continue to be some diamonds in the rough that remain down, for now. With the market recovering, a potential bull market on the way, inflation coming down and potentially interest rates next, now is the best time to get in on struggling stocks.
That’s why today we’re going to look at four struggling stocks to consider on the TSX today. Ones you won’t regret buying not only in the next year, but also in the next few decades.
Buy banks
The banking industry is absolutely the best place to start if you’re unsure of where to invest, and want a discount. The banking sector has seen shares fall drastically in the face of higher interest rates and inflation. Consumers simply don’t have the cash to spend, and that means they aren’t taking out loans right now at these higher rates.
Yet banks have a long history in Canada of creating provisions for loan losses. These have allowed the banks to soar back to 52-week highs within a year of hitting 52-week lows. That’s been the case for everything since the 1837 banking crisis. Not even the Great Depression could hold them down.
Yet when it comes to value there are two I would consider the best for now. Those would be Canadian Imperial Bank of Commerce ( TSX:CM ) and Bank of Montreal ( TSX:BMO ). Both of these banks are still struggling stocks that continue to put cash aside for provisions for loan losses. They have seen lower earnings and this has kept investors away, tending to go to fairly valued or even higher valued banks.
But that’s exactly why both are a deal. These banks have a lot of growth now and in the future, and growth that will come eventually. So if you’re patient, now is a great time to buy. Both trade in value territory, with CIBC stock trading at just 11.3 times earnings with a 6.18% dividend yield. Meanwhile, BMO stock offers a 5.06% dividend yield, trading at 1.2 times book value.
Get rich from REITs
Right now is also a great time to consider real estate investment trusts (REIT). But not just any REITs in this case either. Investors should certainly look for companies that are more stable in this sector. Which is exactly why I would consider industrial REITs.
Industrial REITs provide the properties that support the growing ecommerce industry, as well as shipping, receiving, and assembly in general. This is a highly in-demand sector, which is certainly why it’s a great investment. Plus, each offers dividends to go right along with your purchase.
The two I would consider these days for dividends and value are Granite REIT ( TSX:GRT.UN ) and Nexus Industrial REIT ( TSX:NXR.UN ). Both are directly invested in the industrial industry, and continue to grow both organically and through acquisitions by building more industrial properties.
Granite stock currently offers a 4.37% dividend yield, trading at 0.83 times book value, with shares down 4% in the last year. So this should give you a quick boost in your portfolio as it recovers among other struggling stocks. Meanwhile, Nexus stock holds a whopping 8.61% dividend yield as of writing, trading at just 4.2 times earnings and shares down 25% in the last year. So now is a great time to get in on some strong value.
The post 4 Struggling Stocks to Buy at a Discount appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has positions in Canadian Imperial Bank of Commerce. The Motley Fool recommends Granite Real Estate Investment Trust and Nexus Industrial REIT. The Motley Fool has a disclosure policy .
2023