ENB:CC - Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now
2024-02-20 21:00:00 ET
There’s no shortage of great investments on the market right now. And following a crazy volatile year that was 2023, many of those can be called absurdly cheap stocks.
Here are two crazy, absurdly cheap stocks that long-term investors should buy now while they’re still discounted.
Let’s start with the obvious pick
I would be remiss if I didn’t mention at least one of Canada’s big banks as one of the absurdly cheap stocks to pick up now. Specifically, I’m referring to Bank of Nova Scotia ( TSX:BNS ).
Scotiabank is the third-largest of the big banks, and like its peers has both a strong domestic arm and a growing international one. Where Scotiabank differs from its peers is where the bank is invested internationally.
After all, there’s a good reason Scotiabank is referred to as Canada’s most international bank. In recent years Scotiabank has invested heavily into Latin American markets – specifically, Mexico, Columbia, Peru and Chile. The bank is well-known in those markets, making it a familiar face for customers.
And that’s not all. All of those nations are part of a trade bloc known as the Pacific Alliance. The alliance is charged with eliminating tariffs and boosting trade between its members. This makes Scotiabank well-positioned in those high-growth markets for the foreseeable future.
So then, why is Scotiabank one of the absurdly cheap stocks right now? Rising interest rates have pushed all banks to bump up provisions for credit losses. That takes a bite out of the bottom line during earnings season.
In fact, during the most recent quarter, Scotiabank saw its adjusted net profit dip a whopping 23% to $7.9 billion. That’s not all. Results for the first fiscal quarter of 2024 are due to be announced next week, and pundits believe there could be more pain coming.
Why buy Scotiabank then?
The big banks have historically fared better than their U.S.-based peers during times of turmoil. And perhaps more importantly, investors should view Scotiabank as a long-term investment not to be measured in weeks or months.
The volatility mentioned above has pushed Scotiabank’s stock price down a whopping 22% over the trailing two years. It has also pushed the P/E of the stock down to just 11.10 making it a superb, discounted buy to consider.
That’s also pushed the yield on Scotibank’s dividend up. As of the time of writing, the yield on that quarterly dividend is a juicy 6.64%. That makes it one of the highest among its big-bank peers and one of the best on the market.
Speaking of dividends…
Income investors looking for absurdly cheap stocks to buy now should also look at Enbridge ( TSX:ENB ). Enbridge is best known for its lucrative pipeline network, which generates the bulk of its revenue. But what many investors may not realize is that the energy infrastructure behemoth does much more.
Apart from its pipeline business, Enbridge also operates North America’s largest natural gas utility by volume and a growing renewable energy business. That designation comes thanks to a trio of acquisitions completed last year.
In total, the natural gas utility serves 7 million customers and delivers a whopping 9.3 billion cubic feet of natural gas each day.
Turning to renewables, Enbridge boasts a network of over 40 facilities located across North America and Europe. Today that network generates enough to power the needs of 1.1 million homes. Perhaps more importantly, renewables provide another recurring (and growing) revenue stream for the company.
That revenue stream allows Enbridge to pay out a very juicy quarterly dividend. As of the time of writing, that dividend works out to an insane 7.88% yield. Even better, investors should note that Enbridge has provided annual bumps to that dividend going back nearly three decades.
And like Scotiabank, Enbridge is one of the absurdly cheap stocks on the market right now. The stock is trading down over 11% over the trailing 12 months.
Absurdly cheap stocks can be found anywhere
No stock, even the most absurdly cheap stocks, are not without some risk. Fortunately, both Scotiabank and Enbridge offer investors some defensive appeal in addition to that juicy yield.
In my opinion, one or both should be core holdings in any well-diversified portfolio.
The post Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now appeared first on The Motley Fool Canada .
Fool contributor Demetris Afxentiou has positions in Bank of Nova Scotia and Enbridge. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy .
2024