2 Overlooked Stocks That Still Look Cheap Right Now

The TSX Index might be getting a bit stretched, but that doesn’t mean there isn’t value out there with some of the overlooked, even forgotten names that still have plenty of promise over the long run. Of course, it might make less sense to go for a stock that isn’t quite working in a market climate where your average stock is up big.

But at the same time, those seeking better value for their money might just have to be patient and buy and hold until the market has a chance to better reflect a company’s true worth through a rally. It can be tough to be a contrarian. And, oftentimes, it doesn’t always work out the way one expects. Laggards can continue to lag, and falling knives can always tumble that much further, knicking those who attempt to catch a deal a bit too soon.

In this piece, we’ll look at two stocks that I still find to be incredibly cheap, even if the names aren’t poised for a timely rally in the second half of the year.

Alphabet

First up, we have shares of Alphabet (NASDAQ:GOOG), which are fresh off a correction. Now down around 10% from all-time highs, I think those who missed the past-year rally might have a chance to get in at a fairly reasonable price of admission. At 27.2 times trailing price-to-earnings (P/E), Alphabet shares seem more or less fairly valued. After the untimely departure of two key AI researchers, though, it’s easy to think the puck is moving towards the likes of an Anthropic or OpenAI and a bit away from Google DeepMind.

Of course, it’s never fun if there’s a key departure or two from divisions that matter most for the long-term fundamentals. But, at the same time, I do think that the sell-off following the departure news is overdone.

With Alphabet recently joining the Dow Jones Industrial Average (and rallying after the fact), I do think that the name is choppy in both directions and might be a fantastic deal if investors are, in fact, missing the forest for the trees. At the end of the day, Google remains a force in AI, and while competition will be tough as CapEx stays hefty, I wouldn’t give up on the name.

Canadian Tire

For those seeking deeper value, Canadian Tire (TSX:CTC.A) looks like a solid bet while it’s going for 16.2 times trailing P/E while sporting a very generous 3.7% dividend yield despite being 6% or so away from prior all-time highs.

While discretionary retail is a tough place to be amid inflation and employment uncertainties, I must say that the bar is set quite low for the firm. Perhaps low enough that a breakout could be in the cards in the second half, as the firm finally gets rewarded for making smart moves at the operating level.

As Canadian Tire’s expenses decline while loyal Triangle members get shopping again, perhaps in response to strong value propositions (remember that value for money has as much to do with quality as price), I like the setup, even though the consumer remains a question mark going into the summer season.

The post 2 Overlooked Stocks That Still Look Cheap Right Now appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has positions in Alphabet. The Motley Fool recommends Alphabet. The Motley Fool has a disclosure policy.