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

Top brands and spinoff should spur Leon’s

Consumers are spending less on furniture in response to higher interest rates and inflation. However, Leon’s strong brands will help its sales rebound with the economy. Its plan to spin off its real estate holdings as a REIT will also unlock hidden value.
LEON’S FURNITURE LTD… Read More

Lower costs will boost earnings

BANK OF NOVA SCOTIA $60 is a buy. The bank (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $72.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 7.1%; TSINetwork Rating: Above Average; www.scotiabank.com) is cutting 3% of its global workforce as it… Read More

Narrower focus will help both of them

Insurer Great-West and mutual fund seller IGM are re-organizing their operations. These moves will let them better focus on their main businesses and spur their long-term profits. However, we prefer IGM for your new buying.
GREAT-WEST LIFECO INC. $44 is a hold. The insurer (Toronto symbol GWO; Conservative… Read More

Linamar’s outlook remains bright

The big three U.S. automakers—General Motors, Ford and Stellantis—recently agreed to new contracts with unionized auto workers. As a group, those customers account for just over half of Linamar’s total revenue, so labour peace cuts its risk. The company is also doing a good job… Read More

CIBC raises your dividend

CANADIAN IMPERIAL BANK OF COMMERCE $58 is a buy. The bank, (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 924.0 million; Market cap: $53.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 6.2%; TSINetwork Rating: Above Average; www.cibc.com) in response to rising interest rates and inflation,… Read More

Earnings should rise in 2024

BANK OF MONTREAL $117 is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 720.9 million; Market cap: $84.3 billion; Price-to-sales ratio: 2.5; Dividend yield: 5.2%; TSINetwork Rating: Above Average; www.bmo.com) completed its $13.8 billion U.S. acquisition of Bank of the… Read More

Loan losses below pre-COVID levels

AMERICAN EXPRESS CO. $164 is a buy. The company (New York symbol AXP, Conservative Growth Portfolio, Finance sector; Shares outstanding: 747.2 million; Market cap: $122.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.5%; TSINetwork Rating: Average; www.americanexpress.com) issues two types of cards: traditional credit cards, which let users carry… Read More

Two ways to tap into e-commerce growth

In July 2015, online auction firm eBay split off its electronic-payment business, PayPal, as a separate firm. Investors received one PayPal share for each eBay share they held.
Both stocks jumped during the pandemic as consumers embraced online shopping, but have moved down as stores re-opened… Read More

Efficiency should offset labour costs

FORD MOTOR CO. $10 is still a hold. The automaker (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.9 billion; Market cap: $39.0 billion; Price-to-sales ratio: 0.2; Dividend yield: 6.0%; TSINetwork Rating: Extra Risk; www.ford.com) reported that its revenue (excluding the financing business)… Read More

Infrastructure spending will spur these two

In the wake of the COVID-19 pandemic, governments in Canada and elsewhere continue to invest in new public works projects such as roads, mass transit systems and hospitals. Those investments are fuelling strong orders for these two dealers of heavy construction equipment as well as… Read More

McKesson streamlines after COVID-19

Shares of drug wholesaler McKesson have surged over 270% in the past five years. That’s largely due to its deal with the U.S. government to distribute COVID-19 vaccines. Even though the pandemic has eased, the company should continue to benefit from its plan to narrow… Read More

Use our updates to enhance your portfolio

IGM FINANCIAL INC. $34 is a buy. The mutual fund seller’s (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 237.8 million; Market cap: $8.1 billion; Price-to-Sales ratio: 2.4; Dividend yield: 6.6%; TSINetwork Rating: Above Average; www.igmfinancial.com) fee income rises and falls with the value of the… Read More

Transcontinental cuts its cyclical risk

Shares of Transcontinental are down 30% in the past year on slowing demand at its commercial printing business. However, it continues to expand its packaging business, which cuts its exposure to the cyclical printing market. It’s also doing a good job controlling costs, which will… Read More

We prefer food sellers over food producers

Under pressure from the federal government, Canada’s leading grocery chains have agreed to a series of measures to lower prices for consumers. Those include discounts, price-matching campaigns, and price freezes. The government is also looking at ways to get food producers to lower their prices.
We… Read More

New products set to fuel sales

MOLSON COORS CANADA INC. is still a hold. The brewer (Toronto symbols TPX.A $83 and TPX.B $82; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 216.5 million; Market cap: $18.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 2.7%; TSINetwork Rating: Average; www.molsoncoors.com) aims to spur its long-term growth by focusing on its core… Read More

Here are three key updates on your holdings

GEN DIGITAL INC. $18 is a buy. The company (Nasdaq symbol GEN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 639.4 million; Market cap: $11.5 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.8%; TSINetwork Rating: Average; www.gendigital.com) changed its name from NortonLifeLock Inc. (old symbol NLOK) in September 2022 following… Read More

Canon pivots from legacy products

CANON INC. ADRs $24 is still a hold. The company (Over-the-counter Pink Sheets market symbol CAJPY; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.1 billion; Market cap: $26.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.canon.com) is a leading maker of printers,… Read More

U.S. auto strikes give them an edge

Shares of Japanese automakers Toyota and Honda have posted solid gains for investors in the past year. That’s partly because strikes at the big three American automakers—Ford, GM and Stellantis—will probably lift the market share for Japanese and Korean industry giants. Both Toyota and Honda,… Read More