3 UNDERVALUED Top Canadian Stocks to Buy Right Now

Here’s why these three stocks are top of my list right now for investors seeking undervalued gems in today’s overvalued market.

| More on:
value for money

Image source: Getty Images

The past year has been a wild ride for the TSX Composite Index. Stocks have swung wildly, as the market has re-priced equities in dramatic fashion, following the sentiment of investors.

Today, sentiment is broadly bullish, resulting in valuations that are way above historical levels. That said, there are still a few opportunities out there.

Accordingly, here are three top picks with valuations I think are attractive today.

Alimentation Couche-Tard

Growth investors have kept an eye on Alimentation Couche-Tard (TSX:ATD.B) for quite some time now, given the fact this stock hasn’t done much in recent years. It is, however, one of the best growth plays in the  convenience store/gas station business. The company’s plans to double its net profits in the next five years, speaking to this growth potential.

Couche-Tard is more of a growth play than income play, so investors need to think of this stock that way. However, the company does provide a dividend of around 1%, a token I view as a freebie.

However, Couche-Tard has raised its dividend twice in recent years, as M&A deal flow has stagnated. The company hasn’t been making deals, and has been getting punished when it’s made bids. However, as stated before, I like the company’s long-term strategic focus, and feel this sentiment is unwarranted today.

Kirkland Lake Gold

Gold has traditionally remained the “safest” hedge against inflation. While that thesis has come into question of late with the rise of cryptocurrencies, many gold bugs are still on the hunt for deals.

One such deal is Kirkland Lake Gold (TSX:KL)(NYSE:KL).

This is a company that is massively undervalued on the basis of its fundamentals. Indeed, a price-to-earnings ratio of 14 for a company with great secular drivers is a dirt-cheap pick. Add that to the firm’s high-margin mining operations and you have a real winner.

Kirkland Lake essentially has no debt and a massive war chest to go out and acquire additional reserves or hike its dividend. I am extremely bullish on this stock, and it remains one of my top ideas today.

Manulife Financial

Manulife Financial (TSX:MFC)(NYSE:MFC) is another dirt-cheap company, when compared to its banking peers.

Like all financials stocks, expectations of rising inflation and improving sentiment around bond yields are very bullish for Manulife. The market should be pricing in a lower discount for Manulife, but as it stands, it isn’t.

Indeed, I believe this provides investors with a rare opportunity to pick up shares of a high-quality company at a relatively steep discount. Manulife’s growth prospects in Asia remain strong, and its core business is one that is one with a number of strong catalysts today.

Additionally, this is a stock with a very attractive yield today. Investors seeking income in their portfolios could do a lot worse than with a long-term holding like Manulife.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

More on Bank Stocks

Young woman sat at laptop by a window
Bank Stocks

Could BMO Stock Be a Big Winner in 2023?

Long-term investors should take a closer look at BMO stock as a potential core holding, especially on dips.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »

Make a choice, path to success, sign
Bank Stocks

Of the Big 6 Bank Stocks: Buy This, Not That

CIBC (TSX:CM) is an interesting Big Six bank stock to buy right now.

Read more »

question marks written reminders tickets
Bank Stocks

Could BNS Stock Be a Big Winner in 2023?

Bank of Nova Scotia stock still appears oversold. Is now the right time to buy?

Read more »

Gold medal
Bank Stocks

Could TD Stock Be a Big Winner in 2023?

TD stock is still down from the 2022 highs. Is this a good time to buy?

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Is Now the Right Time to Buy Banking Stocks?

TD Bank stock is still riding high, despite the very difficult environment that it and all banking stocks are facing…

Read more »

Payday ringed on a calendar
Bank Stocks

How to Create $500 in Passive Income Each and Every Month

Combining your TFSA with a covered call ETF can create some very lucrative passive-income streams.

Read more »

woman data analyze
Bank Stocks

BNS Stock: Here’s What’s Coming in 2023

Here's what investors and market participants should look for in 2023 when it comes to Bank of Nova Scotia (TSX:BNS)…

Read more »