One of the best places to find bargain stocks is the 52-week low list—a compilation of out-of-favour companies. It can be a tricky list, however, given that many stocks trade lower for good reason.
Let’s take a look at three stocks hitting annual lows and ascertain whether they’re bargains or duds.
Chemtrade Logistics Income Fund (TSX: CHE.UN)
I’ve been a big fan of Chemtrade for some time now. In January I named it Canada’s best income stock. Why am I so bullish?
Chemtrade is the definition of a sleeper stock that continues to deliver year after year. For nearly 13 years, it has paid the same monthly dividend of $0.10 per share. Never has it cut or delayed this payout.
Over the last decade, Chemtrade shares have only risen by around 25%. If you’ve held on to receive the monthly dividend payments, however, you’ve made out like a bandit. Total shareholder return over the last 10 years surpasses 150%, handily outpacing the TSX Index.
Today, shares trade with a 13.4% dividend yield. That may seem too good to be true, but long-term investors in Chemtrade know that the company’s history backs up this income stream.
Namaste Technologies Inc (TSXV:N)
Namaste was one of the hottest cannabis stocks of 2018. In September, its market cap was nearly $1 billion. Since that peak, shares have fallen by around 80%.
If you’re tempted to pick up this pot stock on the cheap, you may want to take a closer look at what’s under the hood.
In October, Citron Research released a report charging Namaste with being a “complete fraud.” Citron essentially accused Namaste’s CEO of engaging in a pump-and-dump scheme. Within months, the CEO was fired.
Today, the stock remains a mess. Compared to other cannabis stocks, Namaste’s business is light years behind. I’m not touching this stock with a 10-foot pole.
SNC-Lavalin Group Inc (TSX:SNC)
SNC-Lavalin is another stock under pressure. This time, there could be opportunity within the flames.
The company builds infrastructure projects, primarily for energy, materials, and transportation organizations. This business model comes fraught with risks. Last year, the company booked a $350 million loss on a single project. Additionally, a political scandal involving Prime Minister Justin Trudeau continues to weigh on shares.
Still, the underlying businesses look healthy. Its oil and gas segment, for example, has a project backlog worth more than $1.5 billion. Its general infrastructure segment has a project backlog in excess of $8 billion.
SNC-Lavalin comes with plenty of risks, but with shares trading at 10-year lows at writing, this could be a “buy when others are fearful” opportunity.
