Through researching over 200 Canadian companies here at Stocktrades.ca, we’ve found some great growth plays on the TSX in a wide variety of industries. If you don’t already know, I’m a huge advocate for growth stocks, and if you’re looking to accelerate the gains in your portfolio, you should be too.
It’s rare to find a stock that has high growth potential, yet low valuation. But, they do exist, and here is four stocks you could consider adding to your portfolio today. Looking for dividend stocks? Here are three dividend giants with double digit upside.
Looking for even more dividends?
Equitable Group Inc (EQB.TO)
Equitable Group (TSX:EQB) also was included on my list of the best financial stocks in the country, and for good reason. The mid cap alternative lender has posted some very impressive growth numbers, and the stock is ridiculously cheap right now. Equitable ranks 5/5 on every single one of our valuation metrics, and right now has, according to analysts, over 33% upside with a one year price target of $81.29.
One of the best stocks to own period?
Equitable has managed double digit average yearly earnings growth for the last 5 years. The company is trading at a price to book of 0.84, a 2 year PEG ratio of 0.64, a forward price to earnings of 5.31, and has a 10.84% dividend payout ratio. So why is the company so cheap?
It’s fairly safe to say that the negative stigma and fears associated with alternative lenders is keeping this stock lower than it should be. As well, the Canadian housing market has often been deemed a bubble just waiting to burst, so I would imagine investors are staying far away from companies who have high exposure to the Canadian housing market. Equitable Bank is one of those companies.
The end result of this is simply a company that isn’t getting the attention it deserves. EQB is set up to have a solid 2019, and if you’re lacking exposure to the Canadian finance sector, it is a solid option.
Out of the 360 stocks we rank here at Stocktrades.ca, Linamar (TSX:LNR) is probably one of the best valued. Second to only Magna International, the company is one of the leading manufacturers of automobile parts. As such, the company is exposed to the extremely cyclical automobile industry. Companies exposed to cyclical industries often have charts that look like a roller-coaster, but for the last year, Linamars has simply looked like the edge of a cliff.
Linamar has gotten beat down severely in 2018 due to fears of automobile tariffs, and has resulted in the company trading at some of the best pricing multiples in the country. A forward price to earnings of 4.61, a price to sales of 0.39 and a price to book of 0.83 all signal extreme under valuation. This is exactly why analysts have indicated a one year upside of over 60% on the automobile giant.
With interest rates on the rise, it’s definitely possible we could see a reduced amount of automobile sales in 2019. But, due to the fear of tariffs Linamar’s price has been beaten down far greater than it should be, and it can’t seem to catch a break right now. Even with fears of reduced sales in 2019, the stock is extremely cheap. If you want cheap exposure to the automobile industry, I’m not sure there is a better option than Linamar.
Seven Generations Energy (VII.TO)
Seven Generations Energy (TSX:VII) is an oil and natural gas producer, primarily located in Western Canada. The company has a diverse portfolio of production, with about 40% coming from condensate, 22% from NGL and 38% from natural gas. The company is Canada’s largest condensate producer.
Looking for more energy plays?
The company has a forward price to earnings of 6.51, a price to book of 0.86 and a 5 year PEG ratio of 0.34. Despite a very poor year from the company in terms of earnings, they finally managed to turn it around in their most recent filing, and analysts have become extremely bullish on the stock. Analysts are predicting over 80% growth estimates in 2019, and have set a 1 year target estimate of $18.88, which indicates 67% upside.
Oil and gas investments are typically a hard one to figure out. There are so many moving parts in the industry, such as economic conditions, commodity prices and labor costs. That being said, wise investments in the sector have been known to pay off handsomely. The ability to find cheap oil and gas stocks could mean good things for your portfolio, and to me, Seven Generations is one that is priced cheap enough that it could be worth the risk.
If you believe oil and natural gas prices will be on the rise in 2019, Seven Generations is definitely a company you need to take a second or even third look at. Keep in mind, we cover over 60 oil and gas stocks here at Stocktrades.ca, and to me, VII.TO is one of the best.
The world is moving towards environmentally friendly products and energy sources. It’s an inevitable transition, especially with a growing population. Cascades (TSX:CAS) isn’t a flashy company, but they are doing a lot of things right. The company produces packages and tissue products. Sounds boring right? Well, one key element with the company is the fact that 80% of its products are made from recycled products, and over 40% of its energy comes from renewable energy sources.
The company has fallen off February 2018 highs of $16.29 and now sits at $10.29 a share. The end result is a stock that is trading fairly cheap in comparison to future growth. The company pays a small dividend, albeit one that has a ton of room to grow at a payout ratio of only 8.65%. A price to book of 0.61, forward price to earnings of 6.81 and a price to sales of 0.21 all signal to me that there is very little future growth accounted for in the current price of this stock.
The company has posted record operation margins this year, and is actively looking to reduce its debt. Analysts predict over 30% earnings growth in 2019, and have given the company a 1 year target estimate price of $14.67, which indicates 42% upside.
As the world transitions to products and energies that are more environmentally friendly and efficient, I can’t help but think companies like Cascades will be able to take advantage. And at its current valuation, it’s presenting an excellent opportunity.
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