3 Top Canadian Value Stocks in October 2023

Undervalued TSX stocks such as Nuvei are trading at a steep discount to consensus price target estimates in October 2023.

Aditya Raghunath ❯

Aditya Raghunath joined the Motley Fool Canada team in 2019 and has close to seven years of experience in covering publicly-listed companies. With a post-graduate degree in finance, Aditya aims to educate and engage Canadians by writing extensively about growth, dividend, and value stocks. If you are considering investing in the stock market, he recommends reading The Intelligent Investor by Benjamin Graham before taking the plunge.

Published October 2, 2023 10:30 am EDT

A turbulent stock market allows shareholders to buy quality stocks at a discount. Investors should ideally go bottom fishing and identify companies trading below their intrinsic value and benefit from outsized gains when markets recover.

Here are three top Canadian value stocks you can buy in October 2023.

Nuvei stock

A fintech company, Nuvei (TSX:NVEI) is down 88% from all-time highs. Nuvei offers a portfolio of payment solutions to small and medium enterprises.

Valued at a market cap of $2.8 billion, Nuvei has increased sales from $245.8 million in 2019 to $843.3 million in 2022. Analysts expect Nuvei to increase revenue by 48.6% to $1.7 billion this year, which suggests the stock is priced at 1.6 times forward sales.

Unlike other high-growth companies, Nuvei reports consistent profits and is forecast to end the year with adjusted earnings per share of $2.28. NVEI stock is priced at nine times forward earnings, which is very cheap.

Its widening bottom line also allows Nuvei to pay shareholders a quarterly dividend of $0.135 per share, which translates to a forward yield of over 2%.

In the second quarter (Q2) of 2023, Nuvei increased total payment volume by 68% while revenue was up 45% year over year due to new customer wins, a robust pipeline across regions, and wallet share expansion opportunities with existing customers.

Analysts remain bullish on Nuvei and expect shares to double in the next 12 months.

Martinrea International stock

An automobile ancillary company, Martinrea International (TSX:MRE) designs, develops, manufactures, and sells metal parts, assemblies, fluid management systems, and modules. It is an automotive supplier that is engaged in the manufacturing of engineered, value-added lightweight structures and propulsion systems.

Despite a sluggish macro environment, Martinrea International increased sales by 22.2% year over year to $1.36 billion in Q2 of 2023. It reported adjusted earnings before interest, tax, depreciation, and amortization of $160.6 million, which was a quarterly record for the company.

Analysts expect Martinrea to end 2023 with adjusted earnings of $2.26 per share, indicating a forward price-to-earnings multiple of just six times. An expansion of the bottom line allows Martinrea International to pay shareholders an annual dividend of $0.20 per share, indicating a yield of 1.6%. These payouts have risen by 8.9% annually in the last six years.

Analysts tracking the TSX stock expect shares to surge by almost 60% in the next 12 months.

Magna International stock

The final TSX value stock on my list is Magna International (TSX:MG), another company that is part of the automobile manufacturing sector. Magna International ended 2022 with sales of $50.6 billion and is on track to increase revenue by 14.9% this year.

Magna International has 351 manufacturing facilities, and its products can be found in several new-age electronic vehicle (EV) manufacturers, including Nio, Rivian, and Lucid. The company is well poised to benefit from the global shift towards EVs, as it disclosed plans to invest $500 million to construct two new manufacturing facilities in Michigan while expanding another plant that is already operational.

Priced at 10 times forward earnings, the TSX stock trades at a discount of 30% to consensus price target estimates.