Are you looking for cheap stocks to buy before the next bull market? If so, you may have some good opportunities in front of you.
Stocks have been trending lower this week, thanks to continued economic anxiety and concerns about earnings. In some cases, the weakness has been justified. For example, tech companies have lost most of their growth yet remain very expensive. These aren’t the kinds of opportunities you want to be looking at (with some exceptions). However, in sectors like banking, energy, and foreign stocks in general, opportunities remain.
In this article, I’ll explore three stocks I’d buy before the next bull market — including one that I have, in fact, bought!
Suncor Energy
Suncor Energy (TSX:SU) is a stock I’ve owned in the past. I don’t own it now, but that’s not due to active dislike. I sold it last year when oil went above $120. At those oil prices, Suncor was trading at $60. I didn’t think oil prices that high would last, nor did I think that long-term oil prices supported a $60 stock price for Suncor. So, I sold both times last year when West Texas Intermediate crude hit the $120 level.
Why do I think Suncor Energy is a good value today?
Well, for one thing, it’s cheap. At today’s prices, SU trades at 5.3 times earnings, 1.27 times sales, and 1.53 times book value. That’s extremely cheap by the standards of today’s market. Now, it’s true that today’s oil prices won’t produce the kinds of earnings growth we saw from Suncor last year. However, Suncor paid off a lot of earnings last year, so earnings might not good down as much as analysts think. I actually think there is a pretty good chance that Suncor’s earnings this year will be nearly unchanged from last year, in which case the 5.25 P/E ratio will continue being super low.
Cenovus Energy
Cenovus Energy (TSX:CVE) is another energy stock. Many of the same points I made about Suncor apply to Cenovus: it’s cheap, it paid off a lot of debt last year ($9 billion worth), it’s financially healthy, and so on.
What makes CVE different is that it is not as controversial as Suncor. SU took a hit last year because of safety issues at its facilities, and because it owns a gas station business that some say is bad for the environment. Oil companies in general are perceived as being bad for the environment, but gas stations especially, because they’re gassing up cars, which can be electric, as opposed to airplanes, which can only run on jet fuel. CVE sold its gas station business recently, so it’s less exposed to risk related to environmental issues compared to Suncor.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE:TSM) is a cheap stock I started buying recently. I began buying in December and have been buying ever since. It’s cheap for a tech stock, trading at only 14 times earnings, and it has great growth potential.
Many people thought that TSM’s earnings would slow down in the current quarter, but it put out a sales update a few days ago that showed shipments still rising in January. The semiconductor industry is, overall, pretty weak right now, with sales declining, but some individual semi stocks are doing well. TSM is one of them.
