Canada’s primary stock market pulled back again last week since the surge to start the fourth quarter of 2022. Stocks are coming off a brutal September due to persistent headwinds such as stubborn inflation and rising interest rates. The TSX might see a lot of bargain hunting if the downtrend continues.
However, if you’re anticipating a market crash, you don’t have to wait for it, because several names are on already on sale. Canadian Western Bank (TSX:CWB) and Cargojet (TSX:CJT) are two of the top stocks trading at absurdly low prices.
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Business transformation to accelerate growth
CWB isn’t a big bank, but the $2 billion lender is strong like its larger industry peers. This bank stock is also a Dividend Aristocrat owing to 30 consecutive years of dividend increases; the most recent hike was 7%. At $22.20 per share, CWB is down 36.89% year to date, although current investors enjoy a 5.59% dividend. The dividend should be safe, given the low 32.61% payout ratio.
While net income in the third quarter (Q3) of fiscal 2022 versus Q3 fiscal 2021 declined 6% to $81 million, CWB reported a 9% year-over-year loan growth to $35.2 billion. Its chief executive officer (CEO) Chris Fowler said, “Our teams delivered very strong loan growth this quarter from clients within our risk appetite that met our strict underwriting and pricing criteria.”
Fowler added, “We expect annual percentage loan growth in the high single digits for fiscal 2022, as we maintain our disciplined lending approach in the current environment.” CWB’s branch-raised deposits during the quarter also rose 9% to $20.4 billion compared to the same quarter in fiscal 2021.
According to Fowler, management will not change its strategy. CWB’s primary objective is to build the best bank for business owners in Canada. The opening of a new banking centre in Markham was due to the strong growth momentum in Ontario and part of the drive to expand geographic diversification. It also launched new personal and small business digital platforms.
Fowler is confident about CWB’s ability to navigate recessionary conditions should they arise. The progress of the ongoing business transformation provides a solid foundation to accelerate growth and enhance profitability.
New milestone
Cargojet is a viable prospect for its upcoming milestone and solid growth prospects. The $2 billion provider of time-sensitive overnight air cargo services will have a fleet size of 40 aircraft by year-end 2022. This increased fleet size will expand its domestic overnight network to 16 Canadian cities, or over 90% of the country’s population daily.
According to management, despite the emerging macroeconomic risks, Cargojet is well positioned to face them. Its highly diversified customer base consists of blue-chip clients with long-term strategic contracts and staggered expiry terms. The company also considers e-commerce growth as a long-term tailwind for air cargo.
The industrial stock currently trades at $116.50 per share (-29.61% year to date) and pays a modest 0.98% dividend. However, future capital gains should be considerable. Market analysts covering CJT have a 12-month average price target of $203.82, or a return potential of 75%.
Great value stocks
A declining market will almost always draw out bargain hunters. CWB or Cargojet are great value stocks whether the TSX crashes or not.
