2 of the Better TSX Stocks I’d Buy Right Now

ONEX (TSX:ONEX) and Suncor Energy (TSX:SU)(NYSE:SU) are TSX stocks with a wide margin of safety heading into late September.

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The TSX Index holds a considerable amount of bargains. So much so that U.S. investors may be inclined to swap their greenbacks for loonies. Undoubtedly, certain investment banks have touted Canadian equities for value seekers.

While there are expensive names like Shopify that could be vulnerable to the market’s next tech-based pullback, there are arguably more dirt-cheap options with valuations that are even at the lower end of the historical range! Undoubtedly, there are plenty of risks ahead, but I’d argue there are more than a handful of names that already have respectable margins of safety. By insisting on a wider margin of safety, you’ll risk less and stand to make more, regardless of what markets do in the final quarter of what’s been a pretty profitable 2021.

Insisting on a wide margin of safety could be key to outperforming

Indeed, I have a strong preference for value here. Not because another first-half growth-to-value rotation is in store. Rather, value could provide you with the shocks needed to make it through the next downturn with less pain than the many investors who’ve been chasing momentum stocks all the way up.

Consider ONEX (TSX:ONEX) and Suncor Energy (TSX:SU)(NYSE:SU), two stocks that trade at near or below their book value at the time of writing.

ONEX

ONEX is a diversified investment manager that I’ve pounded the table pretty hard on over the past year. Shares have steadily climbed over 123% off their March 2020 bottoms. Today, the stock is just 5% higher than where it peaked in 2020 before the devastating crash. And although the huge discount to book value is gone, I still think ONEX is one of the more undervalued and underrated plays out there.

Heck, many Canadians may have never heard of the company. Undoubtedly, it’s famous for acquiring Westjet Airlines around a year before the coronavirus recession sparked one of the steepest sell-offs in recent memory. ONEX shares nearly got cut in half, but they’re now ready to pick up where they left off back in early 2020.

With a proven track record for beating the TSX, I think investors should put their trust in ONEX’s managers, which are worth paying a fat premium to book value. At the time of writing, ONEX stock trade at just 0.8 times book value, which is a bargain in my books given the wonderful businesses under the hood and the exceptional stewards running the show.

Suncor Energy

The brutal performance continues for Suncor Energy, which took another 2% dive on Tuesday despite continued resilience in the price of oil. With West Texas Intermediate (WTI) just shy of US$71 per barrel, Suncor and the broader basket of TSX energy stocks are looking to be in great shape. Despite improving industry conditions, Suncor stock struggles to recover from the 2020 market crash, which wiped out over 64% in value between January and March of 2020.

Year to date, Suncor stock has trailed the market, and with shares retreating rapidly off their summer highs, the stock seems like a fast-falling knife. Closing in on a low $20 level of support, though, I think SU stock is worth grabbing, even if it means a high likelihood of suffering near-term losses.

I just think a 1.0 times book multiple is far too good a deal to pass up on for a proven integrated energy company that’s well-positioned to hike its dividend again.

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.

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