This has been a difficult year for investors and individuals. No investment manual could have helped you prepare for the wild swings experienced in 2020. The broader markets fell close to 35% in early 2020 and recovered these gains over the next six months. 

However, as the new wave of coronavirus infections are sweeping across Europe and North America there is a chance for the markets to end 2020 significantly lower. Every market correction should be viewed as an opportunity to buy quality companies at a lower valuation. 

This is where value investing comes into play. Value investing is the process of identifying stocks trading at a cheap valuation compared to their earnings and growth potential. Most value stocks have common attributes. They have mature businesses that generate stable and predictable cash flows. This resilient business model allows companies to pay and increase dividends for investors. 

In value investing you look for stocks that are trading at a discount to their intrinsic value. This allows the company to outperform broader markets over time. You can take a look at ratios such as forward price to earnings or PEG as well as price to book to find undervalued companies. 

Generally, if a company has a PEG or price to book value of below 1, the stock is considered undervalued. But you still need to understand the business and long-term prospects of these companies before you invest your hard-earned money in these stocks. 

Here we take a look at five such value stocks for investors. 

An Energy Giant

The first company on this list is Canada’s energy giant Suncor (TSX:SU)(NYSE:SU). Suncor operates as an integrated energy company and focuses on developing petroleum resource basins in Canada's Athabasca oil sands.

Suncor explores, acquires, develops, produces, and markets crude oil in Canada and internationally. It markets petroleum and petrochemical products under the Petro-Canada name primarily in Canada. It operates in exploration & production and refining & marketing of oil sands. 

The exploration and production segment is involved in offshore operations off the east coast of Canada and in the North Sea. Further, it has operating onshore assets in Libya and Syria. The refining and marketing segment refines crude oil and intermediate feedstock into various petroleum and petrochemical products.

Suncor also markets refined petroleum products to retail, commercial, and industrial customers through its dealers, sales channel, other retail stations, and wholesale customers. 

Energy companies have been under the pump for several months due to the COVID-19 pandemic and the oil price war between Saudi Arabia and Russia. Suncor stock is trading at $15 and has lost 67% since the start of 2020. This means its trading at a market cap of $23 billion indicating a price to book value of 0.7x and a price to sales value of 0.8x. 

Analysts covering Suncor have a 12-month price target of $27.5 which is 84% above its current trading price. Further, Suncor stock also has a forward yield of 5.2% which means a $10,000 investment in the company will help you generate $520 in annual dividend payments. 

A Banking Stock

Another value stock that you can buy right now is Laurentian Bank (TSX:LB)(OTC:LRCDF), a company that provides various banking services to individuals, small and medium-sized enterprises, and institutional customers in Canada and the United States. 

Laurentian Bank operates through personal, business services, and institutional segments. The company offers demand, and term deposit products, investment accounts, personal loans, home-equity, guaranteed investment certificates, real estate renting and leasing services, personal and commercial loans, and residential mortgage loans, as well as mortgage insurance. 

Similar to the energy companies, companies in the banking sector have also experienced a sustained sell-off in 2020. The high unemployment rates in Canada have worried investors as there is a high chance of mortgage and loan defaults. 

Banks including Laurentian have had to increase their provision for credit losses which has hurt profit margins. Further, a low interest rate environment has also lowered the bottom line and profitability. 

LB stock is trading at $26 and has lost 45% since the start of 2020. This means it's trading at a market cap of $1.8 billion indicating a price to book value of 0.5x and a price to sales value of 1.2x. 

Analysts covering Laurentian have a 12-month price target of $29.5 which is 14% above its current trading price. Further, LB stock also has a forward yield of 6% which means a $10,000 investment in the company will help you generate $600 in annual dividend payments.

A Real Estate Investment Trust

The third and final company on the list is real estate giant RioCan (TSX:RIO.UN)(OTC:RIOCF) which is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. 

As at June 30, 2020, its portfolio comprises 221 properties with an aggregate net leasable area of approximately 38.6 million square feet including office, residential rental and 15 development properties.

As offices were shut for a large portion of this calendar year, retail-focused REITs such as RioCan have seen their stock spiraling downwards. However, as the world recovers from the pandemic and normalcy returns, you can expect this stock to move higher. 

RioCan has paid dividends for 20 consecutive years. It has a diversified client base and no single tenant accounts for more than 5% of sales. There is the risk of defaults but this can be offset by security deposits and federal economic benefits for businesses. 

RioCan stock is trading at $14.2 and has lost 50% since the start of 2020. This means its trading at a market cap of $4.5 billion indicating a price to book value of 0.62x and a price to sales value of 3.9x. 

Analysts covering RioCan have a 12-month price target of $21, which is 40% above its current trading price. Further, RioCan stock also has a forward yield of 9.9% which means a $10,000 investment in the company will help you generate $990 in annual dividend payments.