2 stocks for long term investors near 52 week lows

2 Canadian stocks to check out

Here are 2 stocks currently at or near their 52 week low.  Each has their own challenges, but I believe both will look like great deals a couple years from now.  If you have time on your side, and can stomach some short term volatility I recommend looking a little closer at the following:

Diversified Royalty $DIV

DIV is a royalty corporation that pays out royalties each month, and currently owns the following royalty streams:

  • Mr. Lube
  • Air Miles
  • Sutton Realty
  • Mr. Mikes

The stock has dropped significantly over the last couple of weeks because investors are concerned about the payout ratio.  The company’s payout ratio is currently over 100% which is typically unsustainable and usually results in a dividend cut.  The situation is a little bit different here, because DIV is sitting on a pile of cash from a previous sale, so they can afford to continue to pay out over 100% for the foreseeable future.  Obviously this cannot go on forever, and eventually they will need to increase revenue to get the payout ratio in line.  The management team is continually looking to add new royalty streams (and has the cash to do it).  I am confident they will pull off another deal before the need to cut the dividend.  They seem to be confident as well, as insiders have continued to buy shares.  If you are okay with a little turbulence in the share price, and confident they can pull off another deal, now might be a good time to snatch up some shares as the recent dip has driven the yield up to almost 8%!

The RBC street consensus has this listed as a strong buy as well.


NFI GROUP (Previously New Flyer) $NFI

With over 8,900 team members operating from more than 50 facilities across ten countries, NFI is a leading independent global bus manufacturer.  SOURCE

Here is another stock that has taken a beating lately.  The stock is at it’s 52 week low, and currently trading at $28.26.  To put in perspective just how far it has fallen; in September the stock was trading  over $52.00.

The stock had run up and basically got ahead of itself.  It was trading at an extremely high P/E of 25+ on top of that they recently announced a few setbacks and a lowered updated guidance.  This got investors thinking they should take some profit and cash out.  The stock now trades at a reasonable P/E of 9.5.   The company is still fundamentally sound, and pays a hefty yet safe 5.94% dividend.  If you believe (like I do) that hybrid, electric vehicles are the future, than NFI seems a safe bet to continue to grow.

There may be some continued downward pressure in the short term, but again if you are a young investor with time on your side, I’d gladly tuck this one away in a TFSA or RRSP, collect the dividend and wait for the stock price to catch up.  I’d look at this anywhere below $30/share.

RBC currently rates this a buy with a fair value of $37.64.

*I currently own Diversified Royalty, but have no position in NFI.  That said, it is on my watchlist and I may start a position in it soon.

4 Comments on “2 stocks for long term investors near 52 week lows

  1. Both stocks trade at good multiples. I own DIV. They just need one more deal to bring the ratio under 100%.

    I used to own NFI back when they were $15 per share, but sold them too soon, before the runup. They are in good business. Cities will always need busses for public transportation, regardless of cities budgets. I also watch NFI, would like to start buying it again under $25.


  2. Pingback: New Buy(s)! Doubling down on 2 favourites and started a new position. – Canadian Dividend Stocks & Finance

  3. Pingback: New Stock Purchase: Diversified Royalty – Canadian Dividend Stocks & Finance

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