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

IGM’s shift will benefit investors

Mutual fund fees are under pressure from low-fee ETFs and government regulations. As a result, IGM Financial is expanding its wealth management operations. That will improve its long-term earnings given that wealth management generates higher margins than mutual fund sales.
IGM FINANCIAL INC. $32 is a.. Read More

Better cash flow cushions COVID hit

FINNING INTERNATIONAL INC. $20 remains a buy. The company (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 162.1 million; Market cap: $3.2 billion; Price-to-sales ratio: 0.5; Dividend yield: 4.1%; TSINetwork Rating: Above Average; sells and services Caterpillar-brand heavy equipment in Western Canada, South… Read More

A good pick for post-pandemic gains

Loblaw’s sales surged during the early stages of the COVID-19 pandemic as stay-at-home orders prompted consumers to stock their pantries. Now that lockdowns have eased, sales are returning to more normal levels.
We feel Loblaw is in a strong position to thrive in a post-COVID-19 environment… Read More

GE hit by COVID-19 and high debt

GENERAL ELECTRIC CO. $6.48 is still a hold. The company (New York symbol GE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.75 billion; Market cap: $56.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.6%; TSINetwork Rating: Average; has three main businesses: aviation (jet engines and aircraft… Read More

Boeing investors face two challenges

BOEING CO. $172 remains a hold. The aircraft maker (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares o/s: 563.2 million; Market cap: $96.9 billion; P.S. ratio: 1.5; Divd. suspended; TSINetwork Rating: Above Average; delivered four commercial jetliners in July 2020 as COVID-19 depressed… Read More

CIBC is prepared to weather this storm

COVID-19 has forced CIBC to increase its provisions for possible future loan losses. However, the bank remains well capitalized and should continue to cut costs as the virus speeds up its customers’ shift to online banking.
CANADIAN IMPERIAL BANK OF COMMERCE $98 is a buy. It’s (Toronto symbol… Read More

Cost cuts will help Molson recover

Molson’s shares are down over 20% since the start of the COVID-19 pandemic. That’s due to the closures of bars and restaurants—which normally supply about 25% of its sales. Lower costs will help the company cope, but the stock will remain depressed until sales rebound.
MOLSON… Read More

IBM thrives in the cloud

IBM, $125.45, is a buy. The stock (New York symbol IBM; Shares o/s: 890.6 million; Market cap: $111.7 billion; TSINetwork Rating: Above Average; Yield: 5.2%) reports that despite new operations, its revenue in the three months ended June 30, 2020, fell 5.4%, to $18.12 billion from $19.16 billion… Read More

These top insurers offer you high yields

Business for our two top Canadian insurance recommendations remains strong, although COVID-19 has slowed their share-price growth. That reflects their drop in wealth management fees this spring as the pandemic hurt their client portfolios. The market downturn also hit their own extensive investment portfolios.
However, both… Read More

Shift to online payments will lift these two

Both Visa and American Express stand to gain from the ongoing shift to online shopping and payments. Moreover, the COVID-19 pandemic has accelerated that shift and should partially offset the current slowdown in credit card spending. Still, in the short-term, the earnings of both companies… Read More

Oil rebound cuts BMO’s risk

BANK OF MONTREAL $76 is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares o/s: 639.6 million; Market cap: $48.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 5.7%; TSINetwork Rating: Above Average; had about $75.2 billion in loans (about 15% of its… Read More

Restructuring will improve profit

GREAT-WEST LIFECO INC. $24 is still a hold. The company (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; shares outstanding: 926.3 million; Market cap: $22.2 billion; Price-to-sales ratio: 0.6; Dividend yield: 7.2%; TSINetwork Rating: Above Average; is Canada’s second-largest life insurer, after Manulife Financial. Power… Read More

These picks are supported by government

Both Calian and Extendicare have a major plus on their side during this time of COVID-19 uncertainty. Specifically, the two get most of their revenue from governments. For Calian, revenue generated from various departments and agencies of the Canadian federal government currently represents about 69%… Read More

TD remains a solid pick in turbulent times

The economic uncertainty caused by COVID-19 has forced TD, and other big banks, to increase the funds it sets aside for possible loan defaults. While that has hurt its current earnings, the bank can comfortably absorb these charges. As well, regulators have relaxed their capitalization… Read More

These updates will enhance your portfolio: Canadian National Railway Co., Home Capital Group Inc. and Loblaw Companies Ltd.

CANADIAN NATIONAL RAILWAY CO. $122 is a buy. Through this stock (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares o/s: 713.5 million; Market cap: $87.0 billion; Price-to-sales ratio: 5.8; Dividend yield: 1.9%; TSINetwork Rating: Above Average; investors gain exposure to a rail network stretching… Read More