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TSX Stocks: 3 UNDERVALUED Canadian Giants to Buy in June – The Motley Fool Canada

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The recent rally in the TSX Index has been a remarkable one given the scale of the crash in March. However, some Canadian bigwigs are still trading below their fair values. So, if you are sitting on some cash, these TSX stocks could be attractive for long-term investment.

Top TSX stock from the Canadian energy patch

North America’s biggest energy infrastructure company Enbridge (TSX:ENB)(NYSE:ENB) has not been as quick to recover as the TSX Index. The stock is still trading 25% lower to its pre-COVID-19 levels. It is currently trading at a price-to-earnings multiple of 15 times, lower than its average historical valuation.

Enbridge is a fundamentally strong company mainly due to its stable cash flows. The company generates a major portion of its earnings from long-term, fixed-fee contracts. Interestingly, it does not have a direct exposure to crude oil prices, which makes it a relatively safe bet.

ENB stock is currently trading at a dividend yield of 7.3%, much higher than TSX stocks at large. Its stable cash flows facilitated an above-average dividend growth in the last several years.

Enbridge’s pipeline network and scale make it stand tall in North America’s energy midstream space. Long-term investors can consider Enbridge amid its attractive valuation and solid dividend profile.

A banking giant to buy and hold forever

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), the third-biggest bank in the country, stood relatively better during the second-quarter earnings.

It reported earnings of $1.07 per share, earnings which were almost 40% lower than the same quarter last year. Scotiabank’s bigger peers reported sharper drops in their recent quarterly earnings.

The pandemic has already done substantial damage to the economy. Loan defaults will likely increase on the back of rising unemployment and will dent banks’ earnings for the next few quarters.

However, top banks like Bank of Nova Scotia are relatively well placed due to their diversified earnings base and high-quality credit portfolio.

Top TSX stock Scotiabank is trading at a price-to-earnings valuation of 11 times. Its price-to-book ratio comes around 1.1 times, the lowest among its peers. Scotiabank’s current valuation indicates that the stock might have a limited downside from its current levels.

It offers a dividend yield of close to 6%, the highest among top Canadian bank stocks. Notably, Bank of Nova Scotia has paid dividends for the last 187 consecutive years.

A telecom giant that differentiates itself from peers

Emerging 5G technology will open up a range of opportunities for several industries, and telecom will be one of them.

Rogers Communication (TSX:RCI.B)(NYSE:RCI), the country’s second-biggest telecom company, is well ahead of peers in the 5G rollout in the country. Rogers has witnessed strong customer growth in its wireless and cable segments in the last few years.

Rogers pays handsome dividends and yields 3.4% at the moment. Its long-term average payout ratio around 60% suggests that it can comfortably accommodate those dividends.

The stock is up almost 25% in the last three months, notably underperforming TSX stocks at large. It is trading at a price-to-earnings ratio of 15 times, which is lower than its peer telecom TSX stocks.

Its diversified earnings base and a leading position in the 5G race make it stand tall among peers.

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Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends BANK OF NOVA SCOTIA and ROGERS COMMUNICATIONS INC. CL B NV.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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All Magic Spells (TM) : Top Converting Magic Spell eCommerce Store

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