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

dividends grow over time
Investing

Opinion: Your 2025 Investing Plan Should Include These Growth Stocks

Here are three top Canadian growth stocks long-term investors may want to consider right now.

Read more »

ETF chart stocks
Investing

These Are My 2 Favourite ETFs to Buy for 2025

iShares Core MSCI All Country World ex Canada Index ETF (TSX:XAW) and Vanguard All-Equity ETF Portfolio (TSX:VEQT) are strong options.

Read more »

calculate and analyze stock
Dividend Stocks

TFSA Investors: 3 Dividend Stocks to Consider Buying While They Are Down

These stocks offer attractive dividends right now.

Read more »

data analyze research
Dividend Stocks

Top Canadian Stocks to Buy Right Away With $2,000

These two Canadian stocks are the perfect pairing if you have $2,000 and you just want some easy, safe, awesome…

Read more »

money goes up and down in balance
Dividend Stocks

Take Full Advantage of Your TFSA With These 5 Dividend Stars

Choosing the right dividend stars for your TFSA can be tricky, especially if your goal is to maximize the balance…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA

These three top dividend stocks are ideal for your TFSA due to their consistent dividend payouts and healthy yields.

Read more »

open vault at bank
Dividend Stocks

1 Magnificent TSX Dividend Stock, Down 10%, to Buy and Hold for a Lifetime

A recent dip makes this Big Bank stock an attractive buying opportunity.

Read more »

Canadian Dollars bills
Dividend Stocks

2 Incredibly Cheap Canadian Growth Stocks to Buy Before It’s Too Late

Buying cheap stocks needs patience and a long-term investment approach. Only then can they give you extraordinary returns.

Read more »