2 bargains to stack before they increase
The Toronto Stock Exchange (TSX) continues to follow a positive trend in June 2021. According to Philip Petursson, Manulife The Chief Investment Analyst of Investment Management, historically the TSX does well when the oil markets do. His observation is relevant, as the energy sector is the best performing sector so far in 2021.
In addition to energy, the healthcare, financials, real estate, consumer discretionary and telecommunications sectors outperform the TSX. The broader market only outperforms five sectors, although all are in positive territory. Despite the remarkable growth of the index, investors can still find and accumulate deals.
Suncor Energy (TSX: SU) (NYSE: SU) and Kinross Gold (TSX: K) (NYSE: KGC) appear undervalued and are a bargain today, if you take a close look at their trading outlook. Their escapes could happen soon.
To look forward
The past is over for Suncor Energy. The energy stock is behaving better than expected with a gain of 44.4% since the start of the year. Due to new optimism, market analysts predict the price will rise 31.7% to $ 40. Suncor also pays a dividend of 2.77%.
The $ 45.75 billion integrated energy company looks poised to regain its lost glory now that the oil price rebound is underway. Also, don’t confuse Suncor with a big old-fashioned oil company because it pioneers high-tech solutions in the industry. It uses technology to find, pump, store and deliver resources.
Suncor is also investing heavily in renewable energy innovations. It owns a $ 300 million interest in a wind farm in Alberta. Soon, the company will capitalize on lithium, one of the country’s precious resource reserves. Alberta’s tar sands are high in lithium, so it could be a hot spot if production starts.
Finally, Canada’s five largest pension funds increased their investments in major oil sands companies, including Suncor Energy, in the first quarter of 2021. Some industry observers believe these fund managers’ investments in fossil fuel producers will pave the way for the transition to cleaner energy.
Kinross Gold goes under the radar, although it may eclipse the bigger one Barrel gold in 2021. The upside potential is expected to be staggering if it continues to show consistent profitability and improved cash flow. The $ 12 billion senior gold mining company has a diverse portfolio of mines and projects.
Management relies on operational excellence, a strong balance sheet, disciplined growth and responsible mining of the company to generate value. The Fort Knox and Nevada mines in the United States, as well as the one in Peru, account for half of Kinross’ total production. Its exploration strategy is focused on high quality brownfield projects, where it expects to discover new resources in the existing footprint or mines.
In the first quarter of 2021 (quarter ended March 31, 2021), revenues and adjusted net income increased by 12% and 51% compared to the first quarter of 2020. In particular, the attributable margin per ounce of gold equivalent sold was increased by 25%. The result exceeded the 13% year-over-year increase in the average realized price of gold.
Industry experts rank Kinross among the highest valued gold stocks today. The current share is $ 9.52, while the dividend yield is 1.53%. Market analysts predict a potential increase between $ 13.73 (+ 44%) and $ 18 (+ 89%) over the next 12 months.
Capital gain plus recurring income
Suncor Energy and Kinross Gold are pillars in their respective industries. Besides the potential capital gains, potential investors will derive recurring income from these dividend payers. Initiate a position now before the stocks break out.
Speaking of two great deals on the TSX in June 2021 …
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This article represents the opinion of the author, who may disagree with the “official” recommending position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Christopher Liew has no position on any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.