Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Air Canada (TSX:AC) and 2 More Cheap Stocks to Buy Now

Published 2021-10-28, 11:00 a/m
Updated 2021-10-28, 11:15 a/m
Air Canada (TSX:AC) and 2 More Cheap Stocks to Buy Now

Air Canada (TSX:AC) and 2 More Cheap Stocks to Buy Now

Though the COVID-19 cases continue to tick up in some areas, I believe the worst of the pandemic is behind us. Further, this could be an opportunity to bet on stocks that will likely gain from easing restrictions, increased economic activities, and normalization of demand trends.

While Air Canada (TSX:AC) continues to be my top recovery play, I am equally bullish on two more TSX stocks. Let’s look at the reasons why I expect these two Canadian companies and Air Canada to deliver high returns in the medium to long term.

Flyers to return The new variant of the virus, continued cash burn, higher debt, closure of international borders, and lower bookings (below the pre-pandemic levels) continue to cap the upside in Air Canada stock in the near term. While I acknowledge these near-term challenges, I maintain a bullish outlook on Air Canada’s long-term prospects.

I believe the ongoing vaccination, easing travel measures, an uptick in domestic demand, and reopening of international borders could significantly boost Air Canada’s financial and operating performance in the medium to long term. Though its financials will likely remain muted in the near term, I expect to see sequential improvement in the coming quarters. Furthermore, Air Canada’s revenue diversification strategy with continued momentum in the air cargo business and focus on lowering costs augur well for growth.

Air Canada stock took a significant amount of beating and has only recovered partially. It continues to trade at more than 50% discount to the pre-COVID levels, providing a good opportunity to go long at the current price levels.

Higher oil prices make Suncor attractive Like Air Canada, Suncor Energy (TSX:SU)(NYSE:SU) stock has also witnessed only a partial recovery. With oil prices trading well above the pre-pandemic levels and economic activities picking up pace, I expect Suncor to deliver strong financials in the coming quarters, which will likely boost its share price.

Its integrated business, higher average realized prices, improved mix, and lower breakeven costs would likely support its profitability. Further, its strategic capital-allocation strategy and focus on lowering its debt augurs well for future growth. Suncor continues to pay a regular dividend and is enhancing its shareholders’ returns through share buybacks.

Overall, improved energy outlook and Suncor’s dominant positioning make me bullish on its stock. Further, Suncor stock is still trading at a significant discount from the pre-pandemic price levels, and it offers a decent yield of about 3%.

Another top energy play With an improving operating environment and recovery in its mainline volumes, Enbridge (TSX:ENB)(NYSE:ENB) is a solid long-term bet that you could consider buying now. Further, investors will likely benefit from Enbridge’s robust dividend payments.

Enbridge’s diversified revenue streams, strength in the core business, and $17 billion secured capital program will likely drive its financials. Further, its recent acquisition and strong growth opportunity in the renewable power segment will likely support its EBITDA and distributable cash flows.

Enbridge stock has recovered almost all of its lost value and is up about 49% in one year. However, its next 12-month EV/EBITDA multiple of 12.4 is still lower than its historical average. Besides trading at a lower multiple, Enbridge stock offers a stellar yield of 6.4%.

The post Air Canada (TSX:AC) and 2 More Cheap Stocks to Buy Now appeared first on The Motley Fool Canada.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.