The US equity markets also experienced a similar V-shaped recovery as they bounced back from their lows. In fact, after the S&P 500 rally on Friday, it was officially up to date since the start of the year.
Many investors cannot understand the disconnect between markets and the global economy. Millions of Canadians are still unemployed. Large parts of the economy are still closed. And GDP in the second quarter is expected to fall sharply. Market action does not correspond to reality at all.
The solution for nervous investors concerned about the sustainability of this market recovery could be to stock up on stocks that are still quite cheap. This allows them to participate in any upside potential while protecting their money against losses. After all, cheaper stocks should be able to withstand a drop better.
Let’s take a closer look at three of these stocks, companies that didn’t really participate in the market recovery.
Like many other REITs, Cominar REIT (TSX: CUF.UN) is still cheap on concerns over the health of the economy.
Cominar is the largest commercial owner in Quebec with a portfolio covering 328 properties and over 36 million square feet of gross leasable area. More than 40% of the portfolio is located in industrial spaces, office spaces and commercial spaces dividing the difference.
Quebec’s economy is slowly reopening, with COVID-19 cases continuing to decline. This is a good sign for Cominar, who struggled to collect rent during the pandemic. The shares are still down about 33% in the past three months.
The good news is that Cominar has a strong balance sheet and a low dividend payout ratio, ensuring that the company can easily remain solvent during this crisis. Investors can buy these stocks cheaply, then sit back, relax and recover their 8.8% dividend yield while the company continues to recover.
Without surprise, Boston Pizza (TSX: BPF.UN) The actions were overwritten because COVID-19 forced restaurants across the country to close. The chain quickly rotated to focus on delivery and take-out sales, but consumers chose to go to fast food instead.
However, the recovery could very well be rapid for the Canadian leader in fast and casual dining. Canadians are running out of money after receiving stimulus money without having many places to spend it. Many have not eaten for months. This pent-up demand should ensure a healthy number, because people are finally allowed to eat again. Remember, Boston Pizza is a space giant with more than $ 1.1 billion in sales in 2019.
We also have to remember that Boston Pizza stocks are pretty cheap compared to the chain’s earnings potential. The company earned $ 1.31 per share of distributable cash last year. The shares are currently trading at $ 8.50 each. Yes, the 2020 figures will be appalling. But the company should recover well in 2021.
Fiera Capital (TSX: FSZ) has been a growth machine by acquisition for the past few years, buying nearly a dozen different small wealth managers. Despite significant growth in assets under management, earnings lagged as management failed to integrate these acquisitions. Investors were not happy and the share price struggled.
Then COVID-19 arrived and plunged the investment world into chaos. Naturally, it was not good for an investment manager.
But Fiera has recovered well with the markets. At $ 10 each, stocks are still cheap compared to the company’s earnings potential. Fiera earned $ 1.34 per share in adjusted earnings in 2019. This gives us a price-to-earnings ratio of only 7.5%. And remember, Fiera is trading at a low valuation, despite its excellent margins. Wealth management is a good business to invest in.
And as with Cominar, Fiera shareholders receive a luscious dividend while they wait. The current dividend yield is 8.4%.
The market rally did not lift all the boats. Cominar, Boston Pizza and Fiera Capital are still very inexpensive at the moment. These are the perfect stocks to buy if you are a little nervous in the short term, as their cheapness will help protect you from downside risk.
More inexpensive inventory than you should buy today!
Freshly published! 5 shares under $ 49 (FREE REPORT)
Motley Fool CanadaThe market-beating team has just released a brand new FREE report revealing 5 “cheap” stocks that you can buy today for less than $ 49 per share.
Our team thinks that these 5 stocks are extremely undervalued, but more importantly, could potentially make Canadian investors quick to act.
do not miss anything! Just click the link below to grab your free copy and find out 5 of these stocks now.