Written by Daniel Da Costa at The Motley Fool Canada
The current market environment offers investors tons of opportunities to buy long-term stocks at dirt-cheap prices that they can hold for years, but only if you act quickly and take advantage of those opportunities. So when you see a high-quality TSX stock trading at a cheap valuation with a low price-to-earnings (P/E) ratio, it’s essential to seize the opportunity.
However, as these stocks continue to recover and rally in price, the discount and opportunities they offer are quickly evaporating.
In just the last six weeks, for example, since March 29, 2023, Cineplex stock has gained roughly 10% in value, while goeasy has earned investors a total return of over 19%.
So although both top TSX stocks still offer investors a ton of value and have low P/E ratios today, it’s essential to act soon, or you could miss the opportunities altogether.
Cineplex is one of the top TSX stocks to buy now
Cineplex is one of the best TSX stocks to buy now as it currently still trades at a low P/E ratio. And importantly, it’s rapidly ramping up its sales and profitability as it finally recovers from the impacts of the pandemic.
Cineplex hasn’t been profitable since 2019, not in any of the three years since 2019, or even in any quarter since the start of the pandemic in early 2020. However, in 2023, Cineplex is estimated to generate at least $0.50 in normalized earnings per share and more than $1.20 in 2024.
Therefore, with Cineplex still trading below $10 a share, currently at $9.50 at the time of writing, it’s exceptionally cheap and has a P/E ratio of just 7.9 times its estimated 2024 earnings.
That’s exceptionally low for any company, but it’s especially low for Cineplex stock, which had an average forward P/E ratio of 26.4 times in the five years leading up to the pandemic.
Therefore, it’s no surprise to see that the TSX stock has already gained over 18% year to date and continues to be one of the cheapest and highest-value stocks on the market today.
goeasy stock has tremendous long-term potential
Another stock that investors should keep their eye on in this environment, especially with its potential to sell off briefly, is goeasy, the specialty finance stock.
goeasy has been one of the most impressive growth stocks in Canada over the last few years. It’s an exceptional business, and its management has done an incredible job, both growing the company as well as mitigating any risks.
However, despite the job management has done with goeasy, the stock is still more volatile and has higher risks due to the fact that its primary business is to lend money to borrowers with below-prime credit ratings.
Therefore, it’s not uncommon to see goeasy sell off significantly when the market environment worsens, or there is a temporary impact on its operations.
Only recently, we saw goeasy trade below $90 a share, and its forward P/E ratio even dropped below 6.3 times, making the stock unbelievably cheap. It’s these opportunities that investors need to jump on, as for years, goeasy has proven to be one of the top stocks on the TSX, both due to its execution and incredible growth potential.
However, even today, after goeasy has recovered by roughly 20% since the start of May, it continues to offer long-term investors an appealing entry point.
Right now, goeasy’s forward P/E ratio is just 7.6 times. That’s extremely cheap for any company, but especially a rapidly growing stock. In fact, its three- and five-year average P/E ratios are 11.5 and 10.6 times, respectively.
Therefore, while you can buy this incredible TSX stock at such a low P/E ratio, goeasy is certainly one of the best stocks on the market to consider adding to your portfolio today.
Before you consider Cineplex, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in April 2023... and Cineplex wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 4/18/23
Fool contributor Daniel Da Costa has positions in Goeasy. The Motley Fool recommends Cineplex. The Motley Fool has a disclosure policy.