Ever since the market rebounded tremendously from the coronavirus market crash in 2020, it’s been difficult to find value. Almost all of the high-quality Canadian stocks able to weather the pandemic have recovered, making it very difficult for value investors to find Canadian stocks to invest in today.
Sometimes investors think value is when a stock is cheap. However, if there is a significant amount of risk, then it’s not actually undervalued.
So when I look at Air Canada, I see a stock that could possibly have upside potential over the next year. But with so much uncertainty and risks, the price it trades at today is not actually that attractive.
Instead, look for stocks that have value now. This means finding businesses that the market is missing, which isn’t always easy. It can be especially difficult because, at the same time as trying to find value, you want to avoid investing in value traps.
So making sure the company is of high-quality is much more important than trying to find the best discounts to previous trading prices. With that in mind, here are four of the best Canadian value stocks to buy today.
Canadian media and entertainment stock
The first stock to consider is Corus Entertainment (TSX:CJR.B), one of the best Canadian value stocks on the market.
Corus is a stock that investors overreacted to during the coronavirus pandemic. This was understandable at the time, given Corus has been trying to turn its business around for years.
Now, however, Corus has proven clearly that it has turned its business around and can continue to improve its position even through the pandemic.
So at a share price below $5, the stock has a tonne of value. It just reported earnings a few weeks ago, and since then, analysts have upgraded the price target to an average of $6.25. That’s a 26% premium to Corus’ stock price today, representing incredible value.
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TSX gold stock
Another great choice for investors today is a gold stock like B2Gold Corp (TSX:BTO). In this environment, gold stocks can play an important part in your portfolio.
Plus, with companies like B2Gold, you can gain exposure to gold at an incredible discount. The company is one of the lowest cost producers in the world.
So with gold’s incredible rise over the last few years, B2Gold has seen its profits skyrocket. These earnings are now being used to pay out a dividend, which currently yields roughly 3.2%.
As well as the incredible discount you can get buying B2Gold, your money will also be well protected. And with a dividend returning cash to shareholders, B2Gold might be one of the best Canadian stocks you buy all year.
Canadian real estate stock
You could also consider a high-quality, Canadian real estate stock like First Capital REIT. First Capital is one of the top mixed-use REITs in Canada.
The problem facing First Capital at the moment is the uncertainty about retail real estate, which has been hammered by the pandemic.
While this is a genuine concern, First Capital is a strong company with robust operations. So for the stock to be trading more than 33% below its pre-pandemic high, there is ample opportunity for long-term value investors.
Canadian energy stock
Energy stocks are another industry where investors can find some great value. However, given the risks that still persist, I’d stick to safer energy investments at the moment, such as a company like Freehold Royalties.
Freehold receives a royalty from all the energy production on the land it owns and leases out. This is a much less risky business model. Plus, with Freehold’s robust balance sheet, the stock is a lot safer than many energy industry peers.
It’s now on the path to recovery as energy stocks start to rebound. However, despite already increasing its dividend once, many analysts think more is to come. Plus, the stock is still down roughly 25% from its pre-pandemic high, offering investors a tonne of value to buy the stock today.
In addition to the four stocks above, here are five more of the top Canadian value stocks to consider buying today!
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Daniel Da Costa owns shares of B2GOLD CORP., CORUS ENTERTAINMENT INC., CL.B, NV, and FREEHOLD ROYALTIES LTD. The Motley Fool recommends FREEHOLD ROYALTIES LTD.