Could This Undervalued Stock Make You a Millionaire One Day?

An undervalued stock with a resilient business model, scale, and growth platforms could make you a millionaire someday.

| More on:

The basic objective of investors is to make money. In stock investing, the strategy is straightforward: buy low and sell high. You’re a winner whether the gain is $1 or $10. However, savvy investors take it further by scouting for undervalued stocks.

Stocks trading below their fair values are buying opportunities. Their prices are depressed temporarily due to several factors, including market conditions. However, the returns or windfall could be substantial when the stock recovers and seeks its actual value.

For instance, the market could be wrong about Parkland (TSX:PKI). The mid-cap energy stock trades at $38.83 per share and is down 8.34% year to date. The 3.61% dividend compensates for the underperformance. Soon, investors expect to earn two more ways: price appreciation and dividends.

Created with Highcharts 11.4.3Parkland PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Growth platforms

Parkland is Calgary-based and operates globally or in 26 countries. The $6.78 billion company is a fuel distributor and convenience retailer. Management believes that diversified products and geographies form a resilient business model. The retail and commercial businesses and logistics assets are competitive differentiators.

Each of the three core business segments (retail, commercial, and supply) is a growth platform. Parkland is also capitalizing on the adoption of electric vehicles. It has completed 55 ultra-fast electric vehicle (EV) charging stations and expects to build or expand network density through its real estate footprint and federal funding.

Latest quarterly results

In the first quarter (Q1) of 2024, sales and revenue declined 14.9% year over year to $6.94 billion. While sales in Canada and the U.S., the drop in the international markets led to a net loss of $5 million compared to $77 million net earnings in Q1 2023. However, Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 14% to $191 million from a year ago. Notably, the Board approved a 3% dividend hike.

“I have full confidence in our team’s ability to execute our operational plan that leverages our customer advantage and unique supply benefits despite headwinds in some of the markets where we operate,” said, Bob Espey, president and chief executive officer (CEO) of Parkland. He disclosed that the disposition of more than $400 million worth of non-core assets is ongoing. The total target by year-end 2025 is around $500 million.

Unplanned shutdown

A drawback for the business was the unplanned shutdown of Parkland’s Burnaby Refinery in early January due to extreme cold weather. The team had to scramble and accelerate maintenance and refining optimization work initially set for Q3 2024.  

Espey added, “We have taken proactive steps to improve organization-wide marketing profitability and enhance the refinery’s utilization and profitability for the remainder of the year. Unfortunately, composite utilization fell to approximately 20%, resulting in an adjusted EBITDA loss of between $60 million and $65 million for Q1 2024.

On April 1, 2024, the Burnaby Refinery safely returned to normal operations with a revised operational plan.

Stock recovery

The subdued business performance at the start of 2024 reflects in the stock’s year-to-date performance, although the trailing one-year price return is +17.23. In the full year 2023, Parkland’s net earnings climbed 36.1% to $471 million compared to 2022. The stock should eventually recover, given the well-positioned assets, supply and logistics capabilities, and refining operations back to normal.

Should you invest $1,000 in Colliers International Group right now?

Before you buy stock in Colliers International Group, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Colliers International Group wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

dividends can compound over time
Dividend Stocks

Is Fiera Stock a Buy for its Dividend Yield?

Fiera stock has one amazing dividend yield right now, but what else should investors consider?

Read more »

The sun sets behind a power source
Dividend Stocks

This Dividend Champion Has Paid Dividends for 51 Straight Years

All hail this dividend king for its proven potential to provide stable, reliable, and growing income.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

The Smartest Telecom Stock to Buy With $3,500 Right Now

Smart TFSA move? Telus stock shines for income & growth, outpacing rivals with a 7.7% dividend yield, two decades of…

Read more »

hand stacks coins
Dividend Stocks

I’d Put $7,000 in These Legendary Dividend Growers to Earn for the Next Decade

If you've got some cash for your TFSA, here are two stocks that should give you growing dividend income and…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Here’s How to Catch up to the Average Canadian TFSA at Age 45

The TFSA can create immense passive income, and this dividend stock is an excellent choice.

Read more »

edit Safe pig, protect money
Dividend Stocks

How I’d Secure My Retirement With a $7,000 Investment Today

If you have the discipline to invest with a long-term strategy, here’s how you can use $7,000 in a TFSA…

Read more »

Canadian flag
Dividend Stocks

TFSA: 3 Canadian Stocks to Buy and Hold for Life

The TFSA is the perfect place to create income for years, and these three are the best Canadian stocks to…

Read more »

dividends grow over time
Dividend Stocks

Where to Invest $9,000 in the TSX Today

These stocks pay attractive dividends that should continue to grow.

Read more »