2 Recovery Stocks on the TSX to Buy Over Cineplex Today

Although Cineplex stock looks like one of the cheapest stocks to buy on the TSX today, these two recovery stocks offer far more potential.

| More on:

Although 2022 is already just weeks away, the pandemic continues to impact our lives every day. There are still plenty of opportunities for investors to find recovery stocks on the TSX that are worth a buy today, such as Cineplex (TSX:CGX), for example.

Prior to the pandemic, Cineplex had built a strong business and was diversifying its operations. It was even set to be bought out at $34 a share.

The fact that the stock trades around $13 today means that Cineplex stock certainly offers investors a decent opportunity. In fact, I’d even recommend it as a better recovery stock than Air Canada today.

At its recent earnings release, Cineplex reported an incredible recovery in sales through the summer. However, it still faces some significant headwinds that other companies don’t face or are less impacted by.

So, if you’re looking at buying a recovery stock on the TSX today, here are two that could offer even more potential.

A top value stock with more potential than Cineplex on the TSX today

If you’re looking to buy a recovery stock on the TSX today, one of the best opportunities has to be Boston Pizza Royalties (TSX:BPF.UN). Boston Pizza, which is Canada’s number one casual dining chain, has over 350 restaurants across Canada.

Dine-in restaurants were, as we all know, one of the hardest-hit industries by the pandemic, so Boston Pizza has always naturally offered investors recovery potential. With restaurants seeing a massive impact due to capacity restrictions, Boston Pizza has earned a lot less revenue and therefore had to trim its dividend.

Recently, though, with capacity restrictions being eased and through the summer season with warmer patio weather, Boston Pizza has begun to make an impressive recovery. And unlike Cineplex stock, because it’s collecting a royalty payment from the restaurants and not relying on them to make a profit, the royalty fund is itself earning a profit and able to return a large chunk of its income to investors.

As of the third quarter, Boston Pizza’s sales have almost recovered fully, coming in just 3% shy of its revenue in the third quarter of 2019. Meanwhile, the stock is paying out just 74% of what it did to investors before the pandemic.

So, in addition to the recovery potential of Boston Pizza’s units, there is also more room for the dividend, which already yields an impressive 6.5%, to be increased, making it one of the best recovery stocks to buy on the TSX today.

Cineplex stock has traded rangebound for months now, and investors who have been patiently waiting and holding the stock haven’t earned anything.

Boston Pizza is in a similar boat because capacity restrictions are the biggest headwind it faces. However, at least the stock is profitable and able to pay investors while we wait for a full recovery.

A high-quality recovery stock to buy while it’s still cheap

Corus Entertainment (TSX:CJR.B) is another stock on that TSX today that hasn’t fully recovered. However, while the stock price hasn’t recovered, the company’s operations have been profitable lately. It’s also been earning tonnes of free cash flow, paying down debt, and like Boston Pizza, pays a dividend to investors while they patiently wait for a recovery.

Right now, Corus Entertainment is in far better shape than Cineplex stock yet still offers investors an incredible discount. Cineplex currently trades at a forward enterprise value (EV)/sales ratio of 1.8 times and a forward EV/EBITDA ratio of 6.4 times.

In comparison, Corus trades at a forward EV/sales ratio of 1.7 times and a forward EV/EBITDA of five times, both of which are cheaper than Cineplex stock. In addition, Corus also trades at a forward price-to-earnings ratio of six times. Cineplex, however, may not even earn a profit over the next 12 months.

So, for now, while Corus remains one of the cheapest stocks on the TSX, it’s one of the best recovery stocks to buy today. Therefore, rather than buying and holding Cineplex stock, waiting for a recovery, I’d consider a stock like Boston Pizza or Corus, which will pay you to wait.

Should you invest $1,000 in Boston Pizza Royalties Income Fund right now?

Before you buy stock in Boston Pizza Royalties Income Fund, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Boston Pizza Royalties Income Fund wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 Daniel Da Costa owns shares of BOSTON PIZZA ROYALTIES INCOME FUND and CORUS ENTERTAINMENT INC., CL.B, NV. The Motley Fool recommends CINEPLEX INC.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Stocks for Beginners

Income and growth financial chart
Tech Stocks

2 Canadian Stocks That Could Turn $10,000 Into $100,000

If you're looking for growth and income, these two are some of the best options out there.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

The Best Canadian ETFs $1,000 Can Buy on the TSX Today

If you're looking for ETFs that can turn $1,000 into strong cash flow, then these are the ones I'd go…

Read more »

dividend growth for passive income
Dividend Stocks

4 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These dividend stocks can certainly stand the test of time, and have already done so for many investors.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

1 Practically Perfect Canadian Stock at All-Time Highs to Buy Now and Hold for a Lifetime

This top Canadian stock owns many of the brands Canadians use every day, checking all the essential boxes.

Read more »

analyze data
Stocks for Beginners

The Best Canadian Stocks to Buy Right Away With $30,000

These three top Canadian stocks have one thing in common: stability. Let's get into why.

Read more »

Stocks for Beginners

1 Magnificent Canadian Stock Down 37% to Buy and Hold Forever

The Canadian stock we're discussing may not seem essential, but parents would argue otherwise.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Almost Constant Monthly Income

These four choices could make any $14,000 investment a strong one, especially with solid dividends that will stand the test…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »