With just over two weeks until Christmas, many of us have the green light to hunt down some holiday deals … while investors are writing “wish lists” of their own, just in time for tax-loss season (a concept covered in-depthby Stockhouse Editorial last week).
As we approach the end of the year, many traders will be looking over their portfolios and making plans to reduce their tax bills by locking in the biggest losses possible from their own holdings. Investors often make their decisions on tangible criteria, like cash flows, dividends or even values, but during these rare times, value and price of a stock are often not mutually exclusive.
For investors hunting for bargains at time when many others are under-cutting their returns, there are a lot of undervalued stocks out there, especially among cannabis, and resource explorers. Here are a few familiar names to look into further, these are by no means the only undervalued companies, but should serve as a starting point for due-diligence.
Still some green left....
The cannabis sector has had a notable 2019 for obvious reasons. Recreational use had been legal for adults in Canada for a year with edibles now legal as well, which led to a sharp pull-backfor many companies’ stock value. Where did the optimism that was so abundant pre-legalization go? The potential beyond the simple cannabis product is still plentiful.
Aphria Inc. (TSX:APHA) - This Canadian LP recorded more than $128 million (CAD) in revenue for Q4 2019 and has some impressive prospects, though the stock price has fallen far from its peaks a year ago.
Worth its weight in....
Gold stocks have been showing a track-record of strong performance as of late, especially operations in safe jurisdictions led by strong management teams. Experienced investors know that this is a sector that is well overdue for its next rally.
B2Gold Corp. (TSX: BTO) - This gold miner has built an increasingly diversified portfolio over the past decade with low all-in sustaining cost and low debt. BTO has three operating gold mines and numerous exploration and development projects in various countries including Mali, the Philippines, Namibia and Colombia.
B2Gold recently reported strong Q3 2019 and YTD 2019 results.
Now for something completely different....
Alimentation Couche-Tard Inc. (TSX: ATD) - North America's largest convenience store owner, this company operates a global network headquartered in Québec. Its name has made frequent media appearances as it works to expand in the US, Asian and Australianmarkets, though the latter has hit a bit of a roadblock. TD Securities had downgraded this stock to a “hold” when it was trading just shy of its all time highs, though it is trading far beyond its past earnings.
This stock trades at a relatively low price given revenues and net income have grown by 20.1% and 15.5%, respectively, on an annualized basis over the last three years. ATD released its fiscal Q2 2020 financial resultsin late November 2019, reporting net earnings of $578.6 million, compared to $473.1 million for fiscal Q2 2019.
All I Want for Christmas is cash....
As stated, these are just some of the stocks to investigate when looking for undervalued picks as tax-loss season gets underway. Given that many sectors have pulled-back significantly, other choice shares may come to light in the near future.
Investors have until December 24th to take advantage of this, though waiting that long likely reduces potential returns from any given stock and many hit by tax loss selling often bottom-out by early December. What stocks are you looking at for tax loss season? Let us know in the comments below.