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Most investors have their characteristic preferences and tendencies. Some lean more toward discounted picks, while others prefer bullish stocks with adequate momentum. However, some deals are good enough to attract a wide range of investors, regardless of their default preferences. This includes undervalued stocks with decent return potential.
An equity company
Calgary-based Alaris Equity Partners (TSX:AD.UN) is a private equity firm with a simple business structure. It invests in businesses that require financial assistance but do not wish to give up control of their company.
It makes investments of about $30 million to $150 million in businesses that fit its criteria, and when those businesses thrive, so does Alaris Equity, proportional to its stake in them. Alaris Equity Partners is currently partners with 19 such businesses.
Alaris used to be a solid dividend and growth stock. But after roughly a decade of decline and fluctuating performances, it became an excellent pick primarily for its dividends. This is changing as the stock rose by over 40% in the last 12 months. In addition, its impressive 7.5% yield and price-to-earnings ratio of four make it a beautiful pick in November.
A REIT
Canada has a healthy selection of real estate investment trusts (REITs) specializing in different real estate market segments, including industrial ones. One solid pick in this particular segment is Nexus Industrial REIT (TSX:NXR.UN). It’s a small REIT with a market capitalization of around $795 million.
However, the portfolio is quite impressive: 89 industrial properties, five office properties, and one retail property. Only two of the industrial properties are co-owned; the REIT solely owns the rest.
As a REIT, its primary attraction is the dividends, and the REIT doesn’t disappoint in this regard. It has an impressive 7.5% yield and has paid out consistent dividends for at least a decade. It didn’t suspend or slash its payouts in 2020, as many of the REITs did. Another reason to consider this REIT now is its impressive price-to-earnings ratio of 3.5, making it relatively undervalued.
A development company
Melcor Development (TSX:MRD) is an Edmonton-based real estate developer and asset management firm. It develops all kinds of properties, including residential communities, commercial properties like offices, and even sports-related properties, particularly golf courses. The company’s most significant revenue segment is land development, which made up about 62% of its revenue last year.
Like Alaris, Melcor Development also had a decent run in the last 12 months and grew by about 17%. However, this growth didn’t negatively impact its price-to-earnings ratio, which remains attractive (5.3). This modest growth pace, valuation, and dividends at a 3.3% yield are adequate reasons to consider this stock in November.
Foolish takeaway
It’s important to understand that not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can have a negative impact on your portfolio. So, it’s a good idea to time your purchase accordingly and for maximum gains.
