Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Value stocks are stocks trading lower than their financial fundamentals suggest. They are perceived as undervalued, and have the potential to rise. Many new tech stocks, for instance, start out as growth stocks and transition into value stocks.

They have a low price-to-earnings and price-to-book ratios—which is why they’re less expensive than growth stocks. Due to this fundamental distinction, a value stock is often traded at a more affordable rate than a growth stock.

To investors, they see companies that fall into this category as undervalued. These investors are less likely to invest in a growth stock because they feel that value company’s stock will eventually reach their full potential once they are recognized by the market.

Generally speaking, the climb is steady for value stocks. The only other way for it to emerge into the market like a growth stock is for it to be a bit more innovative with its products or services.

Pat McKeough is an expert at delving into a company’s financial statements and identifying undervalued securities and value stocks. That’s because value stocks are the foundation of any long term investment strategy, at TSI Network we also recommend our three-part Successful Investor strategy:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

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Value Stocks Library Archives

Leon’s has the more-promising outlook

LEON’S FURNITURE LTD. $14.30 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 77.5 million; Market cap: $1.1 billion; Dividend yield: 3.9%) has steadily increased the number of stores under its Leon’s banner from 27 in 2003 to today’s 86.
In 2013, the company nearly quadrupled in size with… Read More

Loblaw sharpens a key tool

LOBLAW COMPANIES LTD. $67 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 369.3 million; Market cap: $24.7 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.loblaw.ca) operates 1,085 supermarkets under several banners, including Loblaws, Zehrs, Provigo, Real Canadian Superstore and No Frills.
In… Read More

Agricultural equipment cuts Linamar’s risk

LINAMAR CORP. $51 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.4 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.4; Dividend yield: 0.9%; TSINetwork Rating: Average; www.linamar.com) makes a variety of automotive parts, including cylinder heads, cylinder blocks, camshafts, crankshafts and connecting rods… Read More

Updating Saputo Inc., Canadian Tire Corp. and Atco Ltd.

SAPUTO INC. $46 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 390.2 million; Market cap: $17.9 billion; Price-to-sales ratio: 1.4; Dividend yield: 1.4%; TSINetwork Rating: Average; www.saputo.com) is Canada’s largest producer of dairy products. It also operates dairies in the U.S., Australia and Argentina.
The company… Read More

Dividend increase: Wyndham Hotels

WYNDHAM HOTELS & RESORTS INC. $49 (New York symbol WH; Cyclical-Growth Payer Portfolio, Consumer sector; Shares o/s: 97.9 million; Market cap: $4.8 billion; Divd. yield: 2.4%; Divd. Sustainability Rating: Above Average, www.wyndhamhotels.com) is the world’s largest hotel franchiser with 9,157 hotels spread across 80 countries.
On… Read More

Leon’s gains despite lower sales

LEON’S FURNITURE LTD. $15 (Toronto symbol LNF; High-Growth Payer Portfolio, Consumer sector; s/o: 76.2 million; Market cap: $1.1 billion; Dividend yield: 3.7%; Dividend Sustainability Rating: Above Average; www.leons.ca) sells furniture and appliances though 303 stores across Canada, mainly under the Leon’s and Brick banners.
The company… Read More

Caterpillar dealers offer reliable dividends

FINNING INTERNATIONAL INC. $23 (Toronto symbol FTT; Cyclical-Growth Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 164.6 million; Market cap: $3.8 billion; Dividend yield: 3.5%; Dividend Sustainability Rating: Above Average; www.finning.com) sells and services Caterpillar-brand heavy equipment in Western Canada, South America and the U.K.
Starting… Read More

U.S. weakness offsets new business

MCKESSON CORP. $116 (New York symbol MCK; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 191.8 million; Market cap: $22.2 billion; Price-to-sales ratio: 0.1; Dividend yield 1.3%; TSINetwork Rating: Above Average; www.mckesson.com) is the largest wholesale drug distributor in the U.S. and Canada. It also operates… Read More

Cloud competition weighs on HPE

HEWLETT-PACKARD ENTERPRISE CO. $15 (New York symbol HPE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares o/s: 1.4 billion; Market cap: $21.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.0%; TSINetwork Rating: Average; www.hpe.com) sells computing services and products, such as servers and analytics software, to… Read More

Shrinking Sears cuts Briggs’ outlook

BRIGGS & STRATTON CORP. $13 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 42.1 million; Market cap: $547.3 million; Price-to-sales ratio: 0.3; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.briggsandstratton.com) makes lawn-mower engines, portable power generators, pressure washers, and snowblowers and throwers.
For… Read More

GE streamlines its operations

GENERAL ELECTRIC CO. $10 (New York symbol GE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.7 billion; Market cap: $87.0 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.4%; TSINetwork Rating: Average; www.ge.com) continues to make progress with its plan to focus on three main businesses: aviation products,… Read More

Tupperware frees up cash for growth

TUPPERWARE BRANDS CORP. $31 (New York symbol TUP; Income Portfolio, Consumer sector; Shares outstanding: 48.6 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.7; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.tupperwarebrands.com) makes consumer goods such as plastic food and beverage containers, and cosmetics and fragrances. It sells… Read More

Outlook is bright for these leaders

INTACT FINANCIAL $109.03 (Toronto symbol IFC; TSINetwork Rating: Extra Risk) (416-341-1464; www.intactfc.com; Shares o/s: 139.2 million; Market cap: $15.2 billion; Dividend yield: 2.8%) is Canada’s largest provider of property and casualty insurance, insuring more than five million individuals and businesses. Its major brands are Intact Insurance, Canada BrokerLink… Read More

Rising steel spurs Russel

RUSSEL METALS $23.24 (Toronto symbol RUS; TSINetwork Rating: Extra Risk) (905-819-7777; www.russelmetals.com; Shares o/s: 62.1 million; Market cap: $1.4 billion; Divd. yield: 6.5%) is one of North America’s largest metal distributors. It serves over 29,000 clients at 51 locations in Canada and 12 in the U.S.
In the three… Read More

Reitmans keeps cutting

REITMANS (CANADA) LTD. $3.70 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 63.3 million; Market cap: $234.2 million; Dividend yield: 5.4%) owns 621 women’s clothing stores across Canada. Those outlets are divided among several brands: Reitmans (265 stores), Penningtons (117), Addition Elle (83), RW &… Read More

Here’s our Pick of the Month

WESTJET AIRLINES $20.92 (Toronto symbol WJA; TSINetwork Rating: Extra Risk) (1-877-493-7853; www.westjet.com; Shares outstanding: 114.0 million; Market cap: $2.4 billion; Dividend yield: 2.7%) serves over 100 destinations in North America, Central America, the Caribbean and Europe.
In the quarter ended December 31, 2018, overall revenue increased 6.6%, to $1.19… Read More

New initiatives will fuel its sales

CANADIAN TIRE CORP. $153 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 66.8 million; Market cap: $10.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.canadiantire.ca) aims to spur sales at its retail chains (Canadian Tire, Mark’s, Sport Chek) with several new… Read More

Updating Precision Drilling Corp., Thomson Reuters Corp., and Home Capital Group Inc.

PRECISION DRILLING CORP. $2.89 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 293.8 million; Market cap: $849.1 million; Price-to-sales ratio: 0.6; Dividend suspended in March 2016; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract drilling services to land-based oil and gas producers, mainly in North America… Read More