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In the current inflationary market where people are constantly losing out on their purchasing power, it is a challenge to make smart investment decisions. This also means that there are good TSX stocks for 2022 that are available at a good discount. Investors who look at Canadian markets should not miss out on this buy-and-hold opportunity provided by the market and pick some of the top-performing TSX stocks under $20 that are trading at an attractive valuation, to book eye-catching total returns.
Top 3 TSX Stocks Under $20 to Buy in the Second Half of 2022
Best TSX Stocks Under $20
Here are the top 3 TSX stocks that can be purchased for under $20 right now:
Tricon Residential is a Toronto-based real estate company that invests in single-family rental and multi-family rental homes. It has about 31,000 properties across the United States and Canada under its umbrella and mainly focuses on the middle market demographics. The stock has suffered extensively in the past few months due to the aggressive rate-tightening policy of the Bank of Canada and has lost more than 30% in the past six months.
The demand for single-family rentals is on a rise these days as higher mortgage rates have reduced the affordability of residential properties. Although single-family rentals have also almost doubled up due to inflation but the rent escalation is still modest when compared to that of the rise in mortgage payments. All this has created a favorable growth opportunity for Tricon Residential.
The company had also depicted strong operating performance in its latest quarterly report. For the quarter ended March 2022, beating the market’s estimates its quarterly revenues have gone up by 53.04% year-over-year to $175.6 million while the net income rose by a whopping 719%. Besides, though the company was unable to meet the market’s expectations with respect to its earnings per share, an EPS growth of about 521% was noticed. The best thing was Tricon Residential could book a net profit margin of 92.47% which was 504% higher compared to last year.
The stock closed on June 29 at $12.86 and the average target price for the stock is $20.51 which is a potential upside of almost 60%. The stock is currently trading at only 3.78 times its earnings and moreover, the current trend suggests there will a strong growth in rental incomes of the company in the coming months.
Algonquin Power & Utilities Corp is an Oakville-based renewable energy and regulated utility company that has most of its assets based in the United States. It has a broad portfolio consisting of power generation and utilities and acquires underutilized hydroelectric, wind, solar, and thermal power facilities to distribute electricity, natural gas, water, and wastewater treatment.
In the past, Algonquin Power had successfully outperformed the market when it came to capital gains. It can perform well even today because a utility business has predictable and stable revenues and this means it will always have access to a reasonable amount of cash inflows to support its operations.
Also, the decision to purchase Kentucky Power for $2.85 billion will shift the company’s assets to a regulated utility model thereby turning its business mix to around 80% regulated. Precisely, through this acquisition, the company’s regulated base will get hiked by 32% while its electricity distribution and transmission infrastructure will get a 37% raise.
Nevertheless, Algonquin Power has also managed to report solid quarterly results in the first quarter of this year. Its revenue rose by almost 16% to $735.7 million while the net income witnessed a massive more than 550% hike to $91 million. The company also received 168% higher cash from its operating activities this time.
In today’s market where investors value passive income, dividend providers like Algonquin Power seem to be quite appealing. The company had been consistently paying out dividends that are currently yielding at 5.31% and had also hiked the dividend payouts by 6% the last time. Further, the stock is also quite cheap now as it is trading at a PE of around 27 times.
The stock closed at $17.37 on June 29 and has an average target price of $21.32 which is a potential upside of almost 23%. Add in the dividend payout and you are looking at handsome gains.
Blackberry is a Waterloo-based software company focused on the cybersecurity sector. As data security has become every organization’s primary concern these days the cybersecurity sector will be having immense growth opportunities in the coming times and consequently, blackberry too will be able to grow more.
However, as the tech sector had been one of the biggest victims of the current market conditions Blackberry stock has suffered too. Therefore, despite its high potential, the stock is now trading almost 50% lower than its 52-week high thereby providing one of the best buying opportunities to the investors interested in the tech sector and especially in the cybersecurity space.
Driven by the rising demand for advanced driver-assistance systems and digital cockpits the company was able to generate better-than-expected first-quarter earnings. For the quarter ended May 31, 2022, Blackberry had reported a revenue of $168 million which despite being slightly lower than last year was ahead of the analysts’ expectations. The strong performance of the IoT segment was the primary reason behind its success. Revenue from the IoT segment had an 18.6% increment compared to the cybersecurity segment whose revenue saw only a 5.6% raise.
The demand for Blackberry’s products is increasing steadily. Its QNX platform now runs in more than 215 million vehicles compared to the year-ago figure of 195 million. Again, as it has received proof-of-concept trials from several OEMs its IVY platform might also substantially drive its revenue in the coming quarters. Blackberry closed June 29 at $7.15.
The above-mentioned TSX stocks under $20 are currently trading at a much lower valuation and have the potential to deliver great returns in the coming years. Therefore, they are a suitable buy at this moment even for the ones who don’t have access to a larger base of capital. But as the market these days is highly volatile, every kind of investment made during this phase will be associated with greater levels of risk. So, before putting your money on, be very cautious and do your own research.
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