This year, with the massive volatility in TSX stocks, several opportunities have presented themselves to investors. And because there has been so much news and so many companies impacted, investors may miss some opportunities at first.
While a lot of stocks have seen a robust recovery since the selloff back in March, some companies continue to trade severely undervalued, despite only short-term impacts on their business.
Furthermore, if the stocks in question are of a high enough quality, they should be able to absorb the impact of the pandemic relatively easily.
Here are two of the top value stocks on the TSX doing just that.
High-value TSX stock
The first stock for investors to consider is Corus Entertainment (TSX:CJR.B). Corus is an entertainment company that earns almost all of its revenue through either subscriptions to its specialty channels or through advertising.
During the initial months of the pandemic, a significant amount of revenue was affected due to companies pulling ad campaigns. However, the hit its revenue took wasn’t impactful enough for the company to consider slashing the dividend.
This is due to the company’s ability to generate strong free cash flow as well as its ability to weather the storm through the pandemic. So, with the TSX stock still down roughly 50% from its 52-week high, there is considerable upside in the shares before investors realize its value.
That could come soon as Corus is reporting earnings later this month. Similar comparable T.V. broadcasting companies in the states have already reported earnings and shown a strong rebound in advertising sales.
Furthermore, management once again confirmed the dividend this quarter. This was expected after Corus kept it intact during the second quarter (the worst impact for the company). However, it’s still another sign of confidence that the company is handling this pandemic well and keeping its financials in good shape.
At today’s prices, Corus is extremely cheap, especially when you look at how much cash flow the company can generate (earning roughly the equivalent of its market cap today over the last two years), the TSX stock is perfect for value investors.
Corus is much more resilient than its 8.1% dividend would lead you to believe. That’s why I wouldn’t wait to buy this high-value TSX stock, you may not only miss locking in a massive dividend, but you could miss some major growth potential, too.
Top long-term growth stock
The other stock you could consider is InterRent REIT (TSX:IIP.UN). InterRent is one of the best residential real estate stocks on the TSX. The stock currently trades down 35% from its 52-week high, slightly less than Corus. However, InterRent has been one of the top growth stocks on the TSX over the last few years.
The company operates solely in Ontario and Quebec. Its main strategy for growth has been to acquire buildings and improve the suites and amenities, allowing it to charge much higher rents.
As it’s able to charge more for rents as leases are renewed, it helps the company to grow its cash flow rapidly. Then it uses that cash flow and recycles into new acquisitions and more capital expenditures for renovations.
InterRent has been highly successful at this, which is why the TSX stock has seen such a strong performance.
That impressive success earned InterRent a significant premium. However, through the recent uncertainty, that premium has been eroded. So, with the stock still well off its highs, today is a great opportunity to gain exposure to this high-quality business.
Plus, residential real estate is highly defensive. You can be confident buying at these prices, knowing this is one of the most resilient REITs on the TSX.
Bottom line
These two stocks are considerably undervalued, offering investors the opportunity to get a great bargain. As the stock market continues to rally, though, these discounts won’t last forever. I wouldn’t wait too long to gain some exposure.
