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2 Top Canadian Stocks Are Bargains Today

edit Sale sign, value, discount
Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

The TSX bull market phase that developed significant momentum in the last few months has finally ended, and the index has slipped more than 3% in roughly eight days. The fall is quite rapid compared to the bullish pace the index had up until a few weeks ago.

However, it’s still concentrated in some parts of the market. Others are still bullish. However, the ones that were already discounted and bargains up for grabs may become even more attractive now, and there are at least two such stocks you should keep an eye on.

A convenience store chain

Alimentation Couche-Tard (TSX:ATD) is one of the largest convenience store chains in the world, though technically, this title should go to one of three brands under the ATD umbrella — i.e., Circle-K, which makes up the bulk of Alimentation’s more than 16,700 stores across 29 countries.

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It was originally an American chain that Alimentation bought in 2003. It became the major global brand of the company in 2015, and since then, its expansion has been exceptional.

The other two brands are Alimentation, which still maintains its strong Quebec roots and has an impressive local presence in — around 652 locations. The third brand is Ingo fuel stations (470) in Sweden and Denmark. The geographically and operationally diversified portfolio offers the company adequate resilience, but it’s the growth that attracts most investors.

The stock has grown at an exceptional rate in the last 10 years — 395%. The growth has slowed down in the last five years, but it’s still enough to double your capital in fewer than six years. The stock is trading at a discount right now, roughly 13%, and the price-to-earnings ratio is at just 18, making it attractively valued and endorsing its status as a bargain.

A telecom stock

BCE (TSX:BCE) is one of the three most significant telecom companies, has 5G stocks in Canada and is a trusted Dividend Aristocrat. It’s the largest player in the telecom sector by market cap and one of the largest in total wireless consumers and customers from other of its business segments.

While the stock did offer modest growth in the past, the past five years have been rough on its market valuation. It’s trading at a 39% discount, but that’s more than just a correction phase. The telecom sector in Canada is facing certain regulatory challenges, and they have taken their toll on the market value of most telecom companies in Canada. BCE is no exception.

One major benefit of this discount is the highly inflated dividend yield of 8.9%, which is especially attractive for a dividend aristocrat. So it’s not just a discounted bargain; it’s a steal at this price, especially for an Aristocrat.

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Foolish takeaway

The two stocks are a bargain today, but they are not just discounted picks you can buy for a few months or years. Both of them may work well as long-term holdings, albeit in different ways. The ATD stock can offer significant growth over the next few decades, and BCE can help you start or augment your passive income.

The post 2 Top Canadian Stocks Are Bargains Today appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.

2024