Investing in lower-priced stocks can help you derive game-changing returns over time. In addition to a stock’s low price, you also need to analyze the company’s fundamentals and balance sheet to see if you should invest your savings in the particular ticker.
Here are two quality TSX stocks you can buy for less than $20.
Stingray Group stock
Valued at $510 million by market cap, Stingray (TSX:RAY.A) is a music, media, and technology company. It offers Stingray Music, a multiplatform music service that offers listeners free access to curated music channels on television, the web, and mobile.
Shares of the company are priced at $7.42 at the time of writing and have surged 30% in the last five years, trailing several other stocks in this period.
In the fiscal third quarter (Q3) of 2024 (ended in December), Stingray increased sales by 12.4% year over year to $100.27 million. Its adjusted net income also rose by 12.5% to $18.48 million, while operating income grew by 25.6% to $30.9 million.
The company almost doubled its free cash flow to $32.6 million in Q3 and pays shareholders a quarterly dividend of $0.075 per share, translating to a forward yield of more than 4%. Given its outstanding share count, Stingray paid shareholders dividends amounting to $3.78 million in Q3, indicating a payout ratio of less than 12%, providing it with the flexibility to invest in growth projects, strengthen the balance sheet, and raise dividends further. In the last eight years, Stingray has more than doubled its dividend payout.
Stingray attributed its solid performance in Q3 to organic growth in the Broadcast and Recurring Commercial Music segment, which includes an 84.3% increase in retail media and FAST channel ad sales.
The company claims it is a “trailblazer” in the retail media ad industry, providing retailers with a robust tech platform that carries customizable ads across a digital network, allowing the latter to successfully monetize in-store customers.
Priced at nine times forward earnings, Stingray stock is quite cheap and trades at a discount of 24% to consensus price target estimates.
Savaria stock
Valued at $1.17 billion by market cap, Savaria has returned over 600% to shareholders in the past decade. Savaria pays shareholders a monthly dividend of $0.043 per share, translating to a forward yield of 3.1%. The company provides accessibility solutions for the elderly and physically challenged people in Canada and many other international markets.
In Q3 of 2023, Savaria reported revenue of $210.1 million, an increase of 4.1% year over year. Its gross profit rose 13.3% to $72.6 million, indicating a margin of 34.5%. Comparatively, operating income stood at $20.6 million, rising 17.6% compared to the year-ago period.
It ended Q3 with $203.4 million in available liquidity, which will be used to support working capital requirements, capital investments, and growth opportunities.
Savaria aims to end 2025 with $1 billion in annual sales, while analysts expect adjusted earnings to expand from $0.55 per share in 2023 to $0.81 per share in 2024. Priced at 20.4 times forward earnings, the TSX stock trades at a discount of 19% to consensus price target estimates.
