Leading up to the pandemic, Canadian value stocks had underperformed the market. The majority of high-quality stocks traded at fair value or even a premium. This left only underperforming value traps as stocks looking like they were trading undervalue.
However, that all changed when the coronavirus pandemic hit, and the stock market crashed as a result.
The very nature of stock market crashes means that many high-quality stocks trade undervalue. So ever since the pandemic began, one of the best strategies has been to buy value stocks.
Of course, growth stocks like tech businesses that were positively impacted by the pandemic have done well too. But the best strategy has been to buy the highest-quality Canadian stocks as they trade undervalue.
By now, a year after the low point of the coronavirus stock market crash, many stocks have reached or even passed their pre-pandemic price, which is making it difficult to find new businesses to invest in. Investors like Warren Buffett are even having a hard time putting money to work.
So value stocks — if you can find them — continue to offer some of the best opportunities for Canadians. And today, one industry that’s recently sold off, creating a major opportunity for investors, is gold.
When the pandemic began and governments around the world were scrambling to react, one of the biggest similarities from country to country was all the economic stimulus that was needed.
With all this money being printed, it was not surprising to see gold prices rise rapidly. Gold had already been on the rise for some time, but as fiat money was being devalued while all the stimulus was being added to the economy, alternative stores of wealth, such as gold and even Bitcoin, saw major rallies as a result.
Now that the pandemic is under control, though, gold prices have started to fall. Not surprisingly, it’s causing top gold stocks to sell off too. And in some cases, this selloff is creating some attractive Canadian value stocks.
Despite this selloff, gold prices have seemed to level off lately, and there are still many catalysts for why gold prices could continue to rally again shortly.
Even at these prices, though, some stocks have sold off far too much. That’s why one of the top Canadian value stocks to buy today is B2Gold Corp (TSX:BTO)(NYSE:BTG).
Top Canadian value stock
B2Gold is one of the most attractive gold stocks you can buy, regardless of its price. So the fact that it’s trading well undervalue makes it a no-brainer buy today.
One of the main reasons the stock is so attractive is because it’s one of the lowest-cost producers. Being able to produce gold for cheaper than the majority of your competitors is a massive advantage in the mining industry.
It means that B2Gold will have some of the best profitability and cash flow generation in its industry. Besides being a low-cost producer and a top Canadian value stock, there are several other reasons why B2Gold is one of the top stocks to buy today.
The company is also a top growth stock. It’s successfully increased its production for 12 consecutive years now. Not to mention, the stock pays a dividend which currently yields 3.5%. That’s an incredible yield when you consider gold producers aren’t normally considered to be dividend stocks.
B2Gold is a great choice today because it’s one of the top Canadian value stocks to buy now. Investors can gain exposure to a company that consistently grows its operations, has impressive margins, and pays an attractive dividend.
The stock currently has a consensus price target above $10. So at today’s price, B2Gold is trading at nearly a 50% discount.
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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.