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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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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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Canada Goose reports Q2 revenue down from year ago, trims full-year guidance

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TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.

The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.

Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.

On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.

In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.

It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:GOOS)

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