4 Undervalued Canadian Stocks to Buy Right Now

Amid improved investors’ confidence, these four undervalued Canadian stocks could deliver superior returns this year.

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The Canadian equity markets continue to rise, as better-than-expected fourth-quarter GDP and higher oil prices increased investors’ confidence. At the close of Tuesday, the S&P/TSX Composite Index was trading just 0.9% lower from its all-time high. Meanwhile, these four Canadian stocks are trading at a considerable discount from their respective 52-week highs and offer excellent buying opportunities.

Cargojet

Amid the pandemic-infused lockdown, several passenger aircraft were grounded, which increased the demand for Cargojet’s (TSX:CJT) services. Further, the increase in online shopping also boosted the company’s financials. Last year, the company’s top line increased by 37.3%, while its adjusted EBITDA increased by 87%. However, the recent pullback in high-growth stocks has led the company’s stock price to correct over 30% from its 52-week high, providing an excellent entry point for long-term investors.

Cargojet had raised around $365 million last month to pay off part of its debt and acquire new aircraft to expand its operations to meet growing domestic and international demand. With online shopping still forming a smaller percentage of overall retail sales in Canada, there is significant scope for expansion, which could benefit Cargojet.

BlackBerry

BlackBerry (TSX:BB)(NYSE:BB) has witnessed a sharp correction over the last few days amid the fears of speculative trading and is trading at over 60% lower than its 52-week high. The decline in its stock prices has also dragged its valuation to attractive levels. The company’s price-to-book multiple currently stands at 3.3.

Its recent collaboration with Amazon Web Services and Baidu could strengthen its position in the automotive space. Further, the company has acquired many blue-chip clients in the cybersecurity and endpoint management segment, thanks to the strong performance from its Spark Suite and Cyber Suite platforms. So, given the deep discount on its stock price and its high-growth prospects, I am bullish on BlackBerry.

Suncor Energy

Amid the supply constraints and increased demand due to improvement in economic activities, crude oil prices have bounced back strongly to trade around $60 per barrel. Meanwhile, some industry experts are projecting oil prices to remain at elevated levels for some time. Higher oil prices could benefit Suncor Energy (TSX:SU)(NYSE:SU). With its long-life and low-cost assets, the company can breakeven at WTI crude trading around $35 per barrel. With oil prices trading well above that level, I expect the company’s margins to rise.

Meanwhile, Suncor’s management expects its operating metrics to improve this year. Its production could rise by 10%, while its refineries utilization rate could improve by 6%. The company has also taken several cost-cutting initiatives, which could lower its operating expenses. With the improving operating metrics and higher oil prices, I expect the company to deliver strong numbers in the coming quarters.

Kinross Gold

My final pick would be Kinross Gold (TSX:K)(NYSE:KGC), trading around 40% lower from its 52-week high. Amid the launch of multiple vaccines, investors shunned gold amid the expectation of strong economic recovery, dragging gold prices and Kinross Gold’s stock price down. The sharp correction has pulled the company’s valuation into an attractive territory, with its forward price-to-earnings and forward price-to-sales multiple standing at eight and 1.7, respectively.

Meanwhile, Kinross Gold expects its production to increase 20% over the next three years, while its cost of sales could fall, which could improve its margins and deliver strong earnings. Further, the company also pays quarterly dividends, with its yield currently standing at 1.5%.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon and Baidu. Tom Gardner owns shares of Baidu. The Motley Fool owns shares of and recommends Amazon, Baidu, and CARGOJET INC. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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