September is one of the worst months for stocks based on seasonal patterns. However, the TSX could buck the trend this year following a strong start on September 1 (+1.25%). It was also the index’s most significant weekly advance (+3.58%) since June 2023.
Meanwhile, many Canadian stocks still trade at low prices or below intrinsic values. Agnico Eagle Mines (TSX:AEM), Enerflex (TSX:EFX), and Secure Energy Services (TSX:SES) are buying opportunities for the resiliency of their operations, notwithstanding the challenging environment. The undervalued stocks could be set for a bull run, too.
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Mining giant
Agnico Eagle Mines is a top-of-mind choice if you want safer exposure to the metals and mining sector. The $32.4 billion gold mining company is 70 years old, well-managed, and operates in politically stable countries (Canada, Australia, Finland, and Mexico). Also, at $65.46 per share (-4.62% year to date), the gold stock pays a decent 3.22% dividend.
Total gold production reached a quarterly record of 873,204 ounces in the second quarter (Q2) of 2023 due to the strong operational performance at all producing sites. The revenues from mining operations and net income increased 8.7% and 12.8% to $1.71 billion and $327 million versus Q2 2022.
Agnico’s president and chief executive officer (CEO) Ammar Al-Joundi said the company is on track to meet its annual production and cost guidance. He also noted the improved production profile of the Odyssey project.
Besides the mine life extension to 2042, the operating mine at Canadian Malartic has a significant geological upside. The pipeline projects in the Abitibi Gold Belt should likewise enhance shareholder value.
Energy of the future
Enerflex is currently developing the full potential of natural gas. The $1.05 billion firm said natural gas is the energy of the future. Its natural gas solutions facilitate the transition from carbon-intensive fossil fuels towards the cleanest-burning alternative.
Based on market analysts’ 12-month average price target, the stock price of $8.49 could rise 62.9% to $13.83. The potential return would be higher if you included the 1.2% dividend.
In the first half of 2023, revenue and operating income rose 130.4% and 241% year over year to $1.6 billion and $92.4 million. Enerflex expects a more resilient and profitable business after it completes the integration with Exterran, a leading natural gas processing and treatment company.
Flying high but undervalued
Secure Energy Services is flying high in 2023 but remains undervalued. At $7.73 per share (+13.65% year to date), it pays a lucrative 5.35% dividend. The stock’s total return in three years is a mind-boggling 447.28%. If you invested $10,000 on September 3, 2023, your money would have grown to $58,560.61 today.
The $2.27 billion company caters to the energy, environmental, and industrial sectors. Besides the oil pipeline infrastructure, Secure Energy has waste processing and metal recycling facilities. It also provides oilfield services like drilling.
In Q2 2023, total revenue and net income declined 14% and 37% to $1.78 billion and $34 million versus Q2 2023. Still, its CEO Rene Amirault said the results demonstrate the resiliency of operations. Secure maintains a constructive outlook concerning demand, activity levels, and volume for the rest of the year.
Top pick
Agnico Mines is my top pick over Enerflex and Secure Energy. Expect gold and gold stocks to soar when central banks begin cutting interest rates.
