The TSX Index is starting to heat up again, now up more than 3% from the June lows and about 1% from all-time highs; Canadian investors may wonder if now marks a good time to pounce on the names on our watchlists. Indeed, the summer season tends to see thinner trading activity. But that isn’t a bad thing, especially if you’re on the hunt for a market bargains that many others may be looking over.
Though summertime volatility could take hold, I think brighter days could be ahead for the TSX Index as value looks to have its moment to shine over high-tech artificial intelligence (AI) plays that have hogged the headlines for most of the first half. Indeed, it’s hard to tell when the next growth-to-value rotation will take hold.
In any case, Canadian investors should insist on value if they’re looking for steady appreciation and steer clear of what could be a long-overdue pullback. Timing the market is never a good idea, but preparing for tougher tides is only prudent.
In this piece, we’ll check out one intriguing TSX stock that’s starting to get absurdly cheap. Even as the TSX continues to blast off in July, the following names, I believe, are trading at historically depressed levels not seen in many years.
TD Bank stock: Severely undervalued, ready to rise in the second half
Without further ado, enter shares of TD Bank (TSX:TD), a Big Six bank that’s had no shortage of troubles over the past year. Whether we’re talking about the money-laundering fallout or the tough provisioning activity, the first half has been rather forgettable for the fallen large-cap banking titan.
Year to date, TD is down more than 11%. New details surrounding money laundering (a known issue for many quarters now) have been a major drag. Recent quarterly disappointments have also not helped the cause.
In any case, TD Bank is still a fantastic bank with some of the best banking assets in the industry. I’ve pounded the table on the name numerous times in the past. Since then, shares have only gotten cheaper!
Though management’s reputation has taken a small hit amid the money-laundering problem that should have never occurred, to begin with, there are big changes for the C-suite on the horizon. It will take time before TD Bank officially announces its new top boss. Until then, expect management to do their best to ensure a smooth transition. For now, they’re sure to have their hands full as they look to put the biggest woe of the past few years behind them.
Personally, I think TD Bank is well-equipped to recover as the worst of the storm blows over. Many banking peers have already gained back to all-time highs, and TD, I think, could be next in line for such a rally. The bank has done a top-notch job of making things right. Though it will take time before TD stock is back in a bull run, the stock looks incredibly underpriced at $76 per share.
When was the last time you saw TD stock with a yield of 5.4%?
Sure, interest rates are on the high side, but the elevated yield also has to do with the stock’s lack of performance. Personally, I view TD’s dividend as one of the growthiest and most secure of the firms, with dividend yields north of 5%. With that in mind, investors may wish to punch their ticket before TD stock gets momentum behind its back again.
