When the stock market and economy are facing significant headwinds, it’s common to see a dampening of investor enthusiasm. Furthermore, the longer these conditions persist, the more disinterested retail investors can become. However, these turbulent times are some of the best opportunities for investors to buy high-quality TSX stocks while they are remarkably cheap.
The key for investors is to see the bigger picture. Slowdowns in the economy or full-on recessions don’t last forever. Neither do downturns in the stock market.
It’s also crucial to focus on finding the highest-quality stocks. Looking to buy stocks that are the best of the best serves two purposes.
First, you can have more confidence in buying them now while there is still so much uncertainty in both the economy and the stock market. In addition, higher-quality stocks will have more long-term growth potential once the economy does begin to recover.
So, with that in mind, if you’re looking for cheap TSX stocks to buy now, here are three of the best to consider.
One of the top TSX stocks to buy while it’s cheap
While there are plenty of cheap TSX stocks to buy today, one of the best and most undervalued companies to consider is WELL Health Technologies (TSX:WELL), a small-cap healthcare tech stock with a market cap of just $937 million.
WELL is an intriguing investment due to its significant growth potential as a tech stock and the defensive nature of its operations, considering it serves the healthcare sector.
You’d think, looking at its share price, that it was being heavily impacted by the slowdown in the economy. However, it’s actually quite the opposite.
In fact, this year, analysts expect its revenue will grow by 33% and another 19% next year. Furthermore, its normalized earnings per share (EPS) are expected to be $0.24 this year and rise another 25% next year to $0.30.
So, as WELL continues to grow its operations while its stock price continues to fall, it’s quickly become one of the top TSX stocks to buy while it’s so cheap.
Right now, WELL stock trades at a price-to-sales (P/S) ratio of just 1.1 times. That’s way below its three-year average of 2.88 times.
Furthermore, it trades at a forward price-to-earnings (P/E) ratio of just 14 times. It also trades at an enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio of 11.3 times.
Both of these are considerably cheap for such a high-potential TSX growth stock, making it one of the best stocks you can buy now.
An ultra-cheap retailer offering a 5% dividend yield
Another high-quality TSX stock to consider buying now while it’s cheap and holding for the long haul is Canadian Tire (TSX: CTC.A).
Canadian Tire’s stock has fallen considerably as the retail sector sees increased headwinds in the current economic environment. However, this selloff has resulted in Canadian Tire becoming ultra cheap.
Plus, in addition to trading undervalued, Canadian Tire pays an impressive dividend with a current yield of roughly 5%.
And if you’re worried about the sustainability of that dividend, it’s worth noting that this year, it should only account for roughly 57% of its expected EPS and just 42% of its expected free cash flow.
Therefore, with Canadian Tire trading at a forward P/E ratio of just 9.7 times, and with analysts expecting a significant recovery in its EPS over the next two years, it’s certainly a top TSX stock to buy now.
A top growth-by-acquisition stock
Last on the list, but certainly not least, is Neighbourly Pharmacy (TSX:NBLY), an impressive defensive growth stock.
Neighbourly has been rapidly growing by acquisition, buying pharmacies across the nation and rebranding them as its own. This strategy is expected to not only grow its customer loyalty but also help improve Neighbourly’s margins thanks to consistently improving economies of scale.
Plus, not only is Neighbourly cheap, but analysts are expecting a 22% increase in both revenue and EBITDA next year.
And right now, Neighbourly trades at EV/EBITDA ratio of just 10.2 times. That’s much lower than the EV/EBITDA ratio of 14 times that it’s averaged since going public in 2021.
So, if you’re looking for top TSX stocks to buy while they’re cheap, Neighbourly is certainly one to consider now.
