TFSA: 5 Cheap TSX Stocks to Buy in August

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The Tax-Free Savings Account (TFSA) was launched in January 2009 as another registered account Canadians could use to secure their future. When it was first introduced, the TFSA had a $5,000 annual contribution limit. The cumulative contribution room sits at $88,000 in 2023. That means six figures or even $1 million is much more attainable. Today, I want to zero in on five cheap TSX stocks I’d look to buy in August 2023.

Here’s why Scotiabank is the first cheap TSX stock I’d target for our TFSA

Scotiabank (TSX:BNS) is the first undervalued TSX stock I’d look to snatch up in our TFSA today. Shares of Scotiabank have increased marginally month over month as of close on August 10. The stock has dipped 1.5% so far in 2023.

The bank reported adjusted net income of $2.17 billion, or $1.70 earnings per diluted share, in the second quarter (Q2) of fiscal 2023 compared to $2.76 billion or $2.18 per diluted share in the prior year. Scotiabank’s earnings took a hit as provisions for credit losses (PCL) rose.

Shares of Scotiabank currently possess a favourable price-to-earnings (P/E) ratio of 9.5. The bank offers a quarterly dividend of $1.06 per share. That represents a tasty 6.6% yield.

Seek exposure to the red-hot lithium space with this stock

Canadian investors should seek exposure to lithium producers, as the electric vehicle (EV) market is in the process of exploding over the course of the 2020s. Lithium Royalty (TSX:LIRC) is a St. John’s-based lithium-focused royalty company that has seen its stock get battered in recent months. Its shares have plunged 34% in the year-to-date period.

EBITDA stands for earnings before interest, taxes, depreciation, and amortization; this metric aims to give a clearer picture of a company’s profitability. This company posted adjusted EBITDA of $13.7 million in Q2 compared to $24.4 million in the prior year. This TSX stock is trading in favourable value territory compared to its industry peers at the time of this writing.

I’m still bullish on this tech TSX stock in the summer of 2023

Kinaxis (TSX:KXS) is an Ottawa-based company that provides cloud-based subscription software for supply chain operations in North America and around the world. TFSA investors can get exposure to artificial intelligence (AI) development with this TSX stock. Shares of Kinaxis have jumped 2.8% so far in 2023.

The company revealed its Q2 earnings on August 9. Kinaxis delivered total revenue growth of 31% to $105 million. Meanwhile, adjusted EBITDA surged 47% to $15.2 million. This tech TSX stock is trading in attractive value territory compared to its industry peers. It is also on track for great earnings growth in the quarters to come.

Why Pet Valu belongs in your TFSA for the long haul

The pet food and pet accessories market has been on fire over the past decades and only gained momentum after the COVID-19 pandemic hit. That should spur investors to target Pet Valu (TSXX:PET). This Markham-based company is engaged in the retail and wholesale of pet foods, treats, toys, and accessories across Canada.

Shares of Pet Valu have plunged 32% so far in 2023. In Q2 2023, Pet Valu achieved revenue growth of 12% to $256 million. Moreover, adjusted EBITDA increased 3.9% to $53.8 million. This TSX stock possesses an attractive P/E ratio of 19 at the time of this writing. Now is a great time to snatch up Pet Valu in your TFSA. Pet Valu also offers a quarterly dividend of $0.10 per share, which represents a modest 1.5% yield.

One more cheap TSX stock that could erupt in your TFSA

Air Canada (TSX:AC) is the fifth and final TSX stock I’d look to snag in our TFSA in the first half of August. This company provides U.S., transborder, and international airline services. Shares of Air Canada have climbed 19% in the year-to-date period.

The company achieved operating revenue growth of 36% to $5.42 billion in Q2. Meanwhile, adjusted EBITDA soared to $1.22 billion compared to $154 million in Q2 2022. Air Canada has seen revenues rebound in a major way as passenger traffic has recovered nicely after the pandemic. This TSX stock is well positioned to deliver the kind of growth we saw in the second half of the 2010s.

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