2 of the Cheapest TSX Stocks Under $25

Suncor Energy (TSX:SU)(NYSE:SU) and Manulife Financial (TSX:MFC)(NYSE:MFC) are two deep-value stocks under $25 I’d buy right now.

| More on:

On average, stocks may be pricey, especially in the United States. But there are numerous dirt-cheap TSX stocks out there, many of which could be overdue for a sudden correction to the upside going into year’s end. In this piece, we’ll have a look at two names that I find Mr. Market has unfairly thrown into the bargain bin, as the price of admission into most other stocks continues to rise.

Only time will tell if putting one’s contrarian hat on with the following names will result in significant alpha for the rest of 2021. Still, I’m a huge fan of the risk/reward scenario here for longer-term investors who are looking for solid returns relative to the risks taken on over the next three to five years.

Suncor and Manulife: Two of the cheapest under-$25 TSX stocks out there

Enter Suncor Energy (TSX:SU)(NYSE:SU) and Manulife Financial (TSX:MFC)(NYSE:MFC): two value plays that are trading at bargain-basement prices, in my books. The former play has been really dragging its feet over the past few months, plunging over 25% from its 52-week high, while the former has taken an unexpected breather after failing to break out past its five-year high.

Indeed, Suncor Energy stock is a falling knife right now and may be a better buy for deep-value seekers, while Manulife appears to be a magnificent buy-the-dip stock for those seeking a timelier play. Both names reek of value in my books. Let’s have a brief look at each one to see which, if either, is worth a spot in your portfolio going into what could be a far more volatile September.

Suncor Energy

Suncor Energy stock has reversed in a big way this summer. The epic rally off those ominous 2020 lows came to a crashing halt, with the stock now in a horrific downtrend with considerable negative momentum. At under $25, the integrated oil play now trades at book value once again.

The recent pullback in the price of oil doesn’t bode well for Canada’s ailing energy patch. Even if oil slips further, I still view Suncor as a pretty stellar value play. The valuation, I believe, has wiggle room for lower oil. While the stock may be too volatile to own (even for Warren Buffett, who ditched his stake last year), I think the magnitude of rewards could have the potential to be great once the fundamentals take the driver’s seat once again.

Despite recent pressure on all things oil, most analysts remain bullish. Most recently, Christopher Tillett of Barclays slapped a $39 price target on the name, suggesting over 66% in upside is possible. That’s a heck of a return! But it won’t come easy for investors.

Manulife

Manulife has one of the best growth profiles of the Canadian insurers. The Asian business holds tremendous promise. But the surging Delta variant has some investors hitting the sell button on the stock. Indeed, that psychological level of resistance looks to be too strong. It’s a five-year high, and Manulife is now sagging after ricocheting off the ceiling.

I think the +15% pullback off the resistance level is a massive buying opportunity for value investors, especially those that aren’t yet exposed to international markets like Asia, which hold so much potential over the next decade and beyond.

Coincidentally, Manulife shares, which are hovering around $25, trade at one times book value — the same as Suncor. And at less than seven times earnings, I think Manulife is one of the cheapest stocks on the TSX right now.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

investment research
Dividend Stocks

Best Stock to Buy Right Now: TD Bank vs Manulife Financial?

TD and Manulife can both be interesting stock picks for today, depending on your investment style.

Read more »

A worker gives a business presentation.
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These stocks are out of favour but could deliver nice returns over the coming years.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 5.5 Percent Dividend Stock Pays Cash Every Month

This defensive retail REIT could be your ticket to high monthly income.

Read more »

Confused person shrugging
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $600 Per Month?

Do you want passive income coming in every single month? Here's how to make it and a top dividend ETF…

Read more »

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

ways to boost income
Investing

Are Telus and BCE Stocks a Smart Buy for Canadian Investors?

Telus (TSX:T) and BCE (TSX:BCE) have massive dividend yields, but their shares have been quite sluggish!

Read more »

investment research
Tech Stocks

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

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »