NTR:CC - Underpriced and Overlooked: 2 Canadian Stocks Ready to Rally
2024-04-25 16:10:00 ET
There have been a few stocks in the last few years that made a big name for themselves in a short period of time. However, many of these afterwards went through a burst in share price, with investors all but forgetting about them in the process.
Yet, there are two companies that continue to be underpriced and overlooked after this period of time. Today, we’re going to look at why these Canadian stocks are ready to rally.
Nutrien
Shares of Nutrien ( TSX:NTR ) surged in the last few years as the demand for potash all of a sudden climbed. This came mainly from sanctions against Russia after the invasion of Ukraine, as Russia is a large producer of inexpensive potash.
However, Nutrien stock went on to crash in share price when investors wanted to take their returns back in 2022. Potash prices slumped, as did other fertilizers, and the company didn’t look as strong as it once did.
However, that’s been changing. Nutrien stock has been experiencing strong momentum in the last few quarters, which could mean it’s ready to rally. During the second quarter of 2023, the stock remained down with the volatility of global crop input markets. This caused net earnings of US$448 million during the second quarter, with full-year 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) predicted to be between US$5.5 and US$6.7 billion.
By the third quarter, the stock delivered record potash sales volumes as demand increased. It generated US$82 million in net earnings, with its adjusted EBITDA guidance narrowing to between US$5.8 and US$6.4 billion for the year. The fourth quarter then reflected a stronger fertilizer market, with net earnings of US$176 million and full-year adjusted EBITDA of US$6.058 billion falling within guidance range.
What’s more, the company expects to achieve more growth in 2024. It now believes it can hit between US$1.65 and US$1.86 billion in retail adjusted EBITDA. With first-quarter earnings around the corner, the company could certainly be in for another surge in share price.
Magna
Another company that’s been seeing some momentum and interest is Magna International ( TSX:MG ). Again, excitement fuelled this company’s growth, with shares climbing as interest in electric vehicles (EV) rose.
However, that interest has shrunk and indeed collapsed. And so has the share price of Magna stock in the meantime — especially given that the company had gone through so many supply-chain disruptions during and even after the pandemic.
And yet, the stock has been making some moves to interest investors once again. In fact, it now looks quite valuable trading at 11.7 times earnings. Magna stock reported sales $10.98 billion in the second quarter, with net income of $339 million. The third quarter saw it shrink to $10.69 billion, with net income rising to $394 million.
By the fourth quarter, sales had fallen down further to $10.45 billion, with net income down as well to $271 million. That being said, the year was strong, seeing total sales of $42.8 billion and net income of $1.2 billion. Sales are expected to continue growing in 2024, with sales expected to be between $43.8 and $45.4 billion in 2024. So, with yet another overlooked stock, this is one investors may want to bring their interest to once more.
The post Underpriced and Overlooked: 2 Canadian Stocks Ready to Rally appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Magna International and Nutrien. The Motley Fool has a disclosure policy .
2024