1 Incredible Value Stock to Buy Right Now

Here’s why Park Lawn Corporation (TSX:PLC) could be a top value stock that most investors haven’t heard of, but probably should have.

| More on:
Technology

Image source: Getty Images

Those seeking a top-notch value stock right now may have their work cut out for them. Even in sectors traditionally thought of as “value” sectors, it’s hard to find companies with valuations that make much sense anymore. Investors simply have to dig harder to find value today.

However, one such company I think has tremendous value and is flying under the radar right now is Park Lawn (TSX:PLC). Let’s take a look at why this cemetery business may be a great buy right now.

Positive outlook for this value stock

The cemetery business is certainly a unique one to consider. In this sector, Park Lawn is one of the two major players with significant market share. However, it’s estimated that independent players account for 89% of the total market.

Park Lawn has been growing via acquisitions in recent years to become a leader in the cemetery business in North America. Approximately 90% of the company’s revenue comes from the U.S., which remains the core market investors are focused on. Indeed, among the reasons many long-term investors like this stock is the relative recession-proof nature of this business. This fact, combined with the potential for continued consolidation in this sector, provides a very strong outlook for this value stock.

Currently, Park Lawn trades at 39 times earnings. From a net debt/EBITDA perspective, Park Lawn currently trades at 1.2 times. Given the growth potential of this company as a result of its continued consolidation trajectory, these metrics are certainly attractive.

Strong financials

One of the reasons Park Lawn has such an attractive outlooks is the company’s financials. Park Lawn brought in 20% more revenue this past quarter than in the same period a year ago. Operating expenses also increased; however, net earnings surged 48% year over year, suggesting the company’s roll-up strategy is working.

Park Lawn’s balance sheet also improved this past quarter. The company raised nearly $150 million in an equity offering, restructuring its debt facilities. Park Lawn ended the quarter with $53 million in cash and debt of around $101 million.

These numbers suggest Park Lawn has not only the ability but the green light from investors to continue along with the company’s growth strategy. Park Lawn is not levered to an alarming degree. Rather, this is a company with the potential to continue to consolidate this space and provide investors with steady returns over time.

Bottom line

I think Park Lawn has the ability to increase its leverage over time and continue growing via acquisitions. Indeed, this company could be one of the best consolidation plays many haven’t heard of.

For those seeking growth at a reasonable price, Park Lawn provides this in spades. This is a top Canadian value stock that I’m watching closely 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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

open vault at bank
Dividend Stocks

Don’t Get Cute; Just Buy Stability: Top Defensive TSX Stocks to Buy Now

A healthy risk tolerance is essential for most investors, but many stray from the tried and tested, hoping to find…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

TFSA Investors: Buy These 3 Stocks for $3,480 Yearly Tax-Free Income

One significant benefit of a TFSA-based dividend income is that it doesn’t weigh down your tax bill.

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, November 8

The TSX Composite benchmark remains on track to end the week with strong optimism as it currently trades with 2.4%…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Are you looking for great income stocks? Here's a trio of high-yield dividend stocks that pay insane yields right now.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Bank Stocks

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

Manulife continues to see momentum in its business and stock price, while TD Bank stock remains down and out.

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

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

Transform a $5,000 TFSA Into a $50,000 Retirement Nest Egg

The TFSA is a powerful tool that can grow a small investment into a substantial retirement nest egg over time.

Read more »