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As we step into October 2023, investors seeking value-driven opportunities on the Toronto Stock Exchange (TSX) can explore three promising Canadian value stocks. In the midst of market turbulence, astute investors often seize the opportunity to identify quality stocks trading below their intrinsic value. These value stocks, when acquired at a discount, have the potential to deliver significant returns as markets rebound. Here are three compelling TSX value stocks listed on the TSX worth considering for the month ahead.
1. Nuvei (TSX:NVEI)
Nuvei, a fintech company, has seen its stock decline by 88% from its all-time highs, presenting a promising entry point for value investors. With a market capitalization of $2.8 billion, TSXV:NVEI offers a diverse portfolio of payment solutions tailored for small and medium enterprises.
Despite the market downturn, Nuvei's sales have shown resilience, climbing from $245.8 million in 2019 to $843.3 million in 2022. Analysts project a robust 48.6% increase in revenue to $1.7 billion this year, positioning the stock at an attractive 1.6 times forward sales.
Unlike many high-growth counterparts, Nuvei maintains consistent profitability and is anticipated to conclude the year with adjusted earnings per share of $2.28. Currently trading at a modest nine times forward earnings, Nuvei offers a compelling valuation.
Moreover, Nuvei's profitability allows it to reward shareholders with a quarterly dividend of $0.135 per share, equating to a forward yield exceeding 2%.
In Q2 2023, Nuvei demonstrated strong performance with a 68% increase in total payment volume and a 45% year-over-year rise in revenue. Analysts remain optimistic about Nuvei's prospects, forecasting a doubling of its share value in the next 12 months.
2. Martinrea International (TSX:MRE)
Martinrea International, an automobile ancillary company, stands out in the value segment. Specializing in the design, development, and manufacturing of metal parts, assemblies, and fluid management systems, TSX MRE has experienced a 22.2% year-over-year sales increase to $1.36 billion in Q2 2023.
Reporting a quarterly record for adjusted earnings before interest, tax, depreciation, and amortization at $160.6 million, Martinrea International exhibits resilience in a challenging macro environment.
Analysts anticipate adjusted earnings of $2.26 per share by the end of 2023, resulting in an attractive forward price-to-earnings multiple of just six times. Martinrea also provides investors with an annual dividend of $0.20 per share, reflecting a solid yield of 1.6%, with annual increases of 8.9% over the last six years.
Market analysts tracking the TSX-listed stock foresee a nearly 60% surge in share value over the next 12 months.
3. Magna International (TSX:MG)
Closing the list is Magna International, a prominent player in the automobile manufacturing sector. Ending 2022 with $50.6 billion in sales, Magna International is poised for a 14.9% revenue increase in 2023.
With 351 manufacturing facilities, TSX MGs products are integral to various new-age electric vehicle (EV) manufacturers, including Nio, Rivian, and Lucid. The company strategically aligns itself with the global shift toward EVs, evident in its plans to invest $500 million in constructing two new manufacturing facilities in Michigan while expanding an existing operational plant.
As markets reassess and recognize Magna International's pivotal role in the EV revolution, the company is well-positioned for sustained growth.
As investors navigate the dynamic landscape of the TSX, these three value stocks—Nuvei, Martinrea International, and Magna International—stand out as promising opportunities for October 2023. Each brings unique strengths and growth narratives, presenting investors with a diversified set of options in the pursuit of value-driven returns.
