These 3 Value Stocks Are Worth 50% More Than Their Market Prices

Undervalued stocks, like RioCan REIT (TSX:REI.UN), could surge back to thier long-term averages.

The stock market has been drifting lower throughout the year. Concerns about growth, inflation, and recession have pushed many stocks to multi-year lows. Some of these companies face declining earnings and squeezed margins, so the drop is justified. But some have been oversold and are now deeply undervalued. 

Here are the top three beaten-down stocks that should be worth up to 50% more than their market prices. 

RioCan

Real estate investment trusts like RioCan (TSX:REI.UN) are in a tricky position. Rising interest rates are likely to cause a housing market crash while REITs offer dividend yields that are below inflation and savings rates right now. 

However, RioCan is in a better position than many of its peers. For one, the company’s portfolio is most commercial real estate. Many of its commercial properties are anchored by grocery stores and banks, which makes the company’s cash flow less vulnerable to the market cycle. 

RioCan’s units are currently trading at $18.11 each. However, the book value per unit was $26.15, as of the end of June 2022. That means the net book value is 44.4% higher than the market price. Assuming rental income growth and new developments in the months ahead, RioCan’s units should be worth even more than the reported book value.

This undervalued real estate company deserves a spot on your watch list.  

Nuvei

Financial technology is clearly out of favour right now. Technology stocks have lost tremendous value this year, and FinTech companies have fared the worst. Payment processor Nuvei (TSX:NVEI)(NASDAQ:NVEI) has lost 54% of its market value year to date. Put simply, it’s worth less than half its previous value. 

At the time of writing, Nuvei stock is trading at its lowest valuation ever. Its price-to-sales ratio is 5.1, which is the lowest it’s ever been. It’s significantly lower than its historical average of 16.5. In other words, the stock price would triple if the valuation reverted to its long-term mean. 

Despite the economic outlook, Nuvei’s business is still growing. In fact, total transaction volume was up 44% in the most recent quarter, while organic growth in revenue was 19%. Based on this resilient growth trend, Nuvei deserves a higher valuation. 

Baytex Energy

Oil stocks are probably the most undervalued segment of the stock market. Oil prices have declined in recent months but are still holding up at multi-year highs. Experts are divided on what comes next. However, most oil stocks are undervalued, even if the price of crude continues to drop. 

Baytex Energy (TSX:BTE) is a good example. The stock trades at price-to-earnings ratio of 3.8. That implies an earnings yield of 26.3%! 

The company is also generating a record amount of free cash flow (FCF). According to analysis by industry expert Eric Nuttall, Baytex could generate an FCF yield of 19% even if the price of crude oil drops to US$70 per barrel. For context, each barrel of West Texas Intermediate crude trades at US$78 right now. 

This undervalued energy stock should be on your watch list. 

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 Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei Corporation. The Motley Fool has a disclosure policy.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

engineer at wind farm
Energy Stocks

Invest $20,000 in This Dividend Stock for $100 in Monthly Passive Income

This dividend stock has it all – a strong outlook, monthly income, and even more to consider buying today.

Read more »

Hourglass and stock price chart
Stock Market

It’s Not Too Late: Invest in These TSX Growth Stocks Now

Solid fundamentals of these top TSX growth stocks could help them maintain strong upward momentum in the years to come.

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

stocks climbing green bull market
Stocks for Beginners

3 TSX Stocks Soaring Higher With No Signs of Slowing

Don't ignore stocks just because they look like they're at a high price. Instead, see exactly why they've driven so…

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

chart reflected in eyeglass lenses
Investing

How Should a Beginner Invest in Stocks? Start With This Index Fund

This Vanguard index fund is the perfect way to start a Canadian investment portfolio.

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »