With the market selling off for most of the year, and the latest pullback, many stock market investors are panicking due to the losses their investments have suffered. As of this writing, the S&P/TSX Composite Index is down by a passive 18% from its 52-week high. Seasoned investors know how to use market downturns to invest in high-quality stocks at a bargain.
Of course, not every stock trading for a lower share price qualifies as an undervalued stock. Some stocks fall in value because it is warranted, and the broader selloff only catalyzes the downward correction.
However, many high-quality businesses with solid fundamentals are also impacted by the market downturn. Such companies boast the potential to recover to higher valuations and deliver stellar long-term growth.
I will give you a quick overview of three of the most undervalued TSX stocks you can buy today.
Image source: Getty Images
Stelco Holdings
Stelco Holdings (TSX:STLC) is a $2.36 billion market capitalization company engaged in producing steel. Headquartered in Hamilton, Stelco stock operates in Canada, the U.S., and several other countries, producing and selling steel products. As of this writing, Stelco stock trades for $34.43 per share, boasting a juicy 3.49% dividend yield. It is down by almost 40% from its 52-week high at current levels.
The company has enjoyed stronger revenues in recent months, as it reported a total revenue increase of 13% year over year in its second quarter for fiscal 2022. Its adjusted earnings rose by 15.2%, exceeding analyst consensus estimates. It has been employing cost-cutting efforts to improve its operational profitability, which seems to be paying off. It can be a good stock to own at current levels.
Minto Apartment Real Estate Investment Trust
Traditional real estate investing might not be the best way to use your investment capital right now due to rising interest rates making borrowing expensive. Buying real estate as investment properties does not necessarily have to be the only way to gain exposure to rental-like income.
Minto Apartment REIT (TSX:MI.UN) is a real estate investment trust (REIT) that can be a viable alternative to buying an investment property.
REITs like Minto Apartment REIT allow you to invest in real estate based on how much you can afford, you get greater liquidity by keeping your money in the stock market and earn a truly passive monthly income like a landlord without the hassles of being one.
The REIT owns, develops, and operates income-producing multi-residential properties in Canada’s urban markets. It is reporting increasing occupancy this year as more potential homebuyers decide to rent amid rising interest rates.
As of this writing, Minto Apartment REIT trades for $12.99 per unit and pays its shareholders their monthly distributions at a juicy 3.66% annual dividend yield.
HIVE Blockchain Technologies
HIVE Blockchain Technologies (TSXV:HIVE) is a $377 million market capitalization cryptocurrency mining company with a substantial inventory of Bitcoin and Ethereum, two of the largest crypto tokens. While the crypto industry itself is in shambles, the immense potential of the underlying blockchain technology is reshaping the future of the payments industry.
HIVE Technologies currently uses its data centres to mine the major crypto tokens. However, it has diversified into NFTs as well.
The company’s financial performance might give investors a reason to consider buying the stock. Its first-quarter earnings report for fiscal 2023 saw its total digital currency production increase by 7% over the previous quarter. Its gross mining margin of $27 million was up by 18% from the fourth quarter of fiscal 2022.
HIVE stock trades for $4.56 per share, trading for an 86.11% discount from its 52-week high. It is an incredibly risky bet, but it can deliver stellar returns if the risk pays off.
Foolish takeaway
It’s essential to understand that stock market investing is inherently risky. Depending on developing macroeconomic factors, further downward price movement is a possibility for these three TSX stocks. If the situation improves, investors owning undervalued stocks like these can look at significant long-term upside.
