The Motley Fool

3 UNDERVALUED Top Canadian Stocks to Buy Right Now

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.

Like these top picks? Here are a few more to choose from:

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.