As we have seen time and time again, including in the current environment, no matter how badly the economy is impacted, the highest-quality stocks won’t stay cheap forever. So, it’s essential to take advantage of the opportunities and buy top stocks while they’re undervalued before they skyrocket and recover.
For example, goeasy is a stock I recommended investors consider, especially when it was trading below $100 a share last year. The impressive specialty finance stock was being temporarily impacted by the economy but still had plenty of potential in both the short and long term to recover and rally significantly.
And ever since it bottomed in early May of last year and the stock has continued to report impressive earnings, it’s rallied significantly, skyrocketing by more than 88%.
So, if you have cash today that you’re looking to invest, here are two of the best and cheapest stocks to buy now before they eventually recover, too.
A top recovery stock to buy before it skyrockets
Investors have been waiting a long time for Cineplex (TSX:CGX) stock to recover, and while it’s been essentially four years that the stock has been impacted, starting at the beginning of the pandemic, the positive news for investors is that everything negative that’s happened to the stock has been out of its control.
First, the pandemic impacted its ability to host customers indoors for essentially two full years. Then, a delay in quality content also caused by the pandemic limited Cineplex’s ability to recover right away once capacity restrictions had been lifted.
Then, in 2023, when it finally looked like Cineplex and the film industry would see a significant recovery, Hollywood strikes caused more delays in the release of high-quality content.
All throughout this stretch, though, Cineplex has done an impressive job controlling what it can control.
For example, it continues to see an improvement in attendance, it’s now generating record box office numbers per customer as well as concession sales per customer, and it’s continued to drive new customers by focusing on international content, which accounted for roughly 10% of its box office in 2023.
In addition, with Cineplex improving both its costs and finding new ways to drive growth, it’s only a matter of time before the company can see a meaningful recovery in profitability, which should lead to significant share price growth.
Therefore, while Cineplex trades dirt-cheap, at a forward enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio of just 7.1 times, it’s certainly one of the best stocks to buy now.
For comparison, in the five years leading up to the pandemic, Cineplex had an average forward EV/EBITDA ratio of 11.2 times.
A top Canadian gold stock trading ultra-cheap
In addition to Cineplex, another high-quality stock that’s significantly undervalued and could see a massive rally in the near term is B2Gold (TSX:BTO), one of the most impressive gold miners on the TSX.
The entire gold sector has faced increased headwinds over the last year and a half, especially due to rising interest rates.
Typically, gold prices and gold stocks would perform well during periods of high inflation because, for many investors, gold is seen as a hedge against inflation. However, as interest rates were being increased so quickly and consistently as a result of the surging inflation, the price of gold and many gold stocks fell out of favour.
This is because as yields increase and income-generating stock and bonds become more attractive, an asset like gold that provides no yield will naturally fall out of favour.
Now, however, with interest rates appearing like they’ve peaked and with uncertainty rising around the globe, gold is coming back into favour, and stocks like B2Gold have the potential to skyrocket significantly.
Plus, not only is B2Gold trading well undervalued, but it also offers an attractive dividend with a yield that has now risen to more than 6.3%, making B2Gold a stock that will pay you to wait for its eventual recovery.
So, if you’ve got cash that you’re looking to invest, now is an excellent opportunity, and there are plenty of high-quality stocks like B2Gold or Cineplex that are trading well undervalued that you’ll want to buy as soon as possible.
