4 Top Value Stocks to Buy With $1,000 in August 2021

While the Canadian market remains strong, a few stocks look attractive on the valuation front. 

| More on:

The rising stock market makes it difficult to find shares offering good value. While the Canadian market remains strong, a few stocks look attractive on the valuation front. 

So, if you’ve got $1,000, consider buying these value stocks for your portfolio right now.

Scotiabank

Scotiabank (TSX:BNS)(NYSE:BNS) stock has grown about 50%, yet it’s trading at a considerable discount compared to peers. Its price-to-book value (P/B) multiple of 1.4 is well below the peer group average. Notably, Bank of MontrealToronto-Dominion Bank, and Royal Bank of Canada are trading at P/B ratios of 1.6, 1.7, and 2.1, respectively. 

I expect Scotiabank to continue to benefit from steady economic growth and a rise in credit demand. Meanwhile, its exposure to the high-quality and good growth banking markets position it well to capitalize on the improving industry fundamentals. 

I expect to see an uptick in loans and deposit volumes. Moreover, lower credit provisions, improved credit performance, and operating leverage are likely to drive Scotiabank’s profitability and, in turn, its stock. Investors will also likely gain from its robust dividend payouts. 

Loblaw

Loblaw (TSX:L) is another Canadian stock looking attractive on the valuation front at the current price levels. The Canadian food and drug retailer is trading at a forward P/E (price-to-earnings) multiple of 16.3. In comparison, both Metro and Alimentation Couche-Tard are trading at a forward P/E ratio of 18.2.  

The addition of Loblaw stock to your portfolio will provide stability. Its low-risk business and steady demand for its products and services reduce the downside risk. Meanwhile, Loblaw could continue to benefit from the expansion of its e-commerce platform, connected healthcare offerings, home delivery services, and attractive rewards program. Meanwhile, higher demand for its online grocery pickup services could continue to drive its traffic and ticket size and boost its market share. 

Air Canada

Air Canada (TSX:AC) is trading cheap but has strong growth potential. The company recently reported impressive Q2 results, which marked a sharp improvement in its revenues, bookings, and capacity, reflecting a pickup in domestic travel demand. Also, its net cash burn continued to decline and came better than management’s expectations.

Management is optimistic that its bookings could continue to increase with the easing of air travel restrictions, while its net cash burn could decline as the year progresses. I believe Air Canada’s financials would get a boost from the normalization of its operations and easing travel restrictions. Furthermore, its rapidly growing air cargo business and lower cost base could support its financials. Despite gaining over 59% in one year, Air Canada stock trades at a significant discount from its pre-COVID levels and is an attractive long-term pick

Capital Power

Capital Power (TSX:CPX) is a top value pick for risk-averse investors. Notably, shares of the Capital Power have witnessed a growth of about 59% in one year. I believe it has further room to run, owing to its growing asset base and solid renewables portfolio. Thanks to its low-risk, power-producing assets and long-term contractual agreements, the utility company is well positioned to deliver higher earnings and predictable cash flows that could continue to drive its dividend payouts and stock price. 

During the most recent quarter, Capital Power raised its dividend by 6.8%, marking the eighth consecutive increase in annual dividend. Capital Power is trading at an EV/EBITDA (NTM) multiple of 8.2 — well below its peer group average. Notably, Canadian UtilitiesFortisTransAlta Renewables, and Algonquin Power & Utilities are trading at forward EV/EBITDA multiples of 10.8, 13.0, 13.2, 14.2, respectively.

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.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.

More on Bank Stocks

stock research, analyze data
Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

There are opportunities and risks on the horizon for the Canadian banks.

Read more »

data analyze research
Bank Stocks

Where Will TD Stock Be in 5 Years?

Toronto-Dominion Bank (TSX:TD) has taken a beating over the last year. Where will it be in another five?

Read more »

Paper Canadian currency of various denominations
Bank Stocks

1 Magnificent Canadian Dividend Stock Down 28% to Buy and Hold for Decades

This top Canadian dividend stock is underperforming its large peers this year, but a turnaround could be on the horizon.

Read more »

data analyze research
Bank Stocks

Is BMO Stock a Buy for its 4.8% Dividend Yield?

Canadians are looking to cut back, and BMO stock is on board. But it could also be a top stock…

Read more »

Investor reading the newspaper
Bank Stocks

Is Canadian Imperial Bank of Commerce Stock a Good Buy?

CIBC is a TSX bank stock that has delivered marketing-beating gains to shareholders in the last two decades. Is the…

Read more »

Man data analyze
Bank Stocks

Where Will TD Stock Be in 5 Years?

TD stock is a good consideration for a 5.2% dividend on the recent dip. It provides upside potential, too, but…

Read more »

customer uses bank ATM
Bank Stocks

These 3 Canadian Bank Stocks Are Next in Line to Pop

Let's dive into three Canadian bank stocks that look well-positioned to continue to soar over the long term.

Read more »

a person looks out a window into a cityscape
Stocks for Beginners

Bank of Montreal vs. RBC: Which Canadian Bank Stock is the Better Buy?

Earnings season is upon us, and the Canadian banks will be reporting before you know it. So which of these…

Read more »