An $8 TSX Index Stock That Could Easily Double

Why Indigo Books & Music Inc. (TSX:IDG) could be your golden ticket to retirement riches.

| More on:

If you’re one to seek huge near-term rewards, then it’s essential that you understand the potential near-term downside risk that you could face. We’re long-term investors here at the Motley Fool, not traders looking to make a quick buck overnight or even over a few weeks. We’re looking for wonderful businesses at wonderful prices, and we intend to hold investments in these businesses for many years at a time.

So, while the stock mentioned in this piece could easily double over the near or medium term, it’s also been one of the more volatile investments out there of late, so it’s possible that the name could lose a quarter (or more) of its value before it sees the highs again.

As a Fool, you need to be in it with a long-term mindset if you’re to see the big rewards at the end of the tunnel. So, without further ado, here’s a TSX stock that could realistically double either before or after more short-term pain.

Enter Indigo Books & Music (TSX:IDG), the bookstore chain that we Canadians all know and love. Indigo stock is down big time over the last year. Since last March, shares have roughly fallen 65% from peak to trough. The brutal decline that was no thanks to last year’s postal strike, which ultimately “turned double-digit gains in October into double-digit declines in November and December,” as pointed out by fellow Fool Will Ashworth.

Talk about an abrupt reversal of fortune!

The sluggish Canadian economy and the continued rise of e-commerce probably isn’t helping the situation. Although the decline is massive, I think it’s exaggerated. If Indigo, a brick-and-mortar book retailer, were to go down, it would have gone down many years ago. Amazon.com had bookstores in its cross-hairs from the get-go, after all!

At the time of writing, Indigo trades at 0.6 price-to-book and 0.2 times sales. Talk about deep value! All the Indigos I’ve been to have healthy levels of customer traffic, and with competitive prices both online and in-store, I see a big rebound once book season returns without the postal strike.

Moreover, rumours in the air suggest that Indigo could be taken private at a time when the stock is severely undervalued.

I get it. Mall-based brick-and-mortar retail stinks, but given the valuation and how robust the company has been since Amazon’s rise to fame, it’s hard to take a pass on the name at these depths.

Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Joey Frenette has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

Hourglass and stock price chart
Stock Market

It’s Not Too Late: Invest in These TSX Growth Stocks Now

Solid fundamentals of these top TSX growth stocks could help them maintain strong upward momentum in the years to come.

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

chart reflected in eyeglass lenses
Investing

How Should a Beginner Invest in Stocks? Start With This Index Fund

This Vanguard index fund is the perfect way to start a Canadian investment portfolio.

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »