Coming in near or below market weight for their per-asset valuations, the following four stocks on the TSX index have attractive price-to-book (P/B) ratios and also pay dividends to their shareholders. What do a few other pieces of data tell us about these stocks, and can we glean a buy or sell signal from them?
Genworth MI Canada (TSX:MIC) A P/B ratio of 0.9 shows that Genworth MI Canada is currently valued below its total worth in real-world assets. Though this private residential mortgage insurer had a negative year-on-year earnings-growth rate of -14.4% and is expecting a drop of -2.1% in earnings over the next one to three years, its five-year average past earnings growth of 7.6% is healthy, and it pays dividend yield of 4.75%. Undervaluation is confirmed by a low P/E ratio of 8.5. Overall, it’s a moderate buy if you’re looking for a bargain financial stock.
Industrial Alliance (TSX:IAG (LON:ICAG)) A P/B of 0.9 brings Industrial Alliance in under the TSX index average of 1.5 times book and shows that the stock is selling below its per-asset worth. This stock ticks all the right boxes: a dividend yield of 3.82% is backed up with a 6.2% expected annual growth in earnings, while a solid track record can be seen in its one-year past earnings growth of 10.6% and five-year average rate of 10.7%.
Its balance sheet is healthy, with a debt level of 39.2% of net worth below the danger threshold, while a considerable amount of inside buying in the last three months indicates that insider confidence is high. Meanwhile, undervaluation is confirmed by a low P/E ratio of 7.9 times earnings.
TMX Group (TSX:X) The last three months have seen more inside buying of TMX Group shares than selling, which bodes well when it comes to insider confidence. Up 4.32% in the last five days, TMX Group pays a dividend yield of 2.88% and has a 5.2% expected annual rise in earnings on the way over the net on to three years to back it up with a bit of growth.
A very popular ticker, it’s got a decent track record evinced by a one-year past earnings growth of 36.1% and five-year average of 19.2% as well as a sturdy enough balance sheet characterized by a level of debt of 34.9% of net worth. Meanwhile, the valuation is shown by a P/E of 17.5 and a P/B of 1.4 that comes in just below market weight.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) CIBC’s one-year past earnings growth of 11.4% beats the Canadian banking industry average, as well as its own five-year average of 10.8% by a small margin. A healthy balance sheet is indicated by a sufficient tolerance for bad loans, and an appropriate comparative amount of non-loan assets. A P/E of 9.6 times earnings and P/B of 1.5 times book shows that this is a temptingly valued stock, with a dividend yield of 4.86% made all the more appetizing by a 4% expected annual growth in earnings.
The bottom line All four stocks here represent decent valuation, coming in at or lower than the average per-asset valuation of the TSX index. Any one of these popular tickers would make a solid choice for a passive-income portfolio, and each offers a certain amount of defensiveness to the risk-averse investor.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019