Finding value in today’s market is the goal of most investors. However, given where valuations are today, it’s an ambitious goal. That said, there happen to be a number of undervalued Canadian stocks just begging to be bought today.
In this article, I’m going to highlight why Alimentation Couche-Tard (TSX:ATD.A)(TSX:ATD.B), Manulife (TSX: MFC)(NYSE: MFC), and Killam Apartment REIT (TSX: KMP.UN) fit this description. Indeed, these are stocks I’ve been pounding the table on of late. Here’s why.
Top undervalued Canadian stock: Alimentation Couche-Tard
Couche-Tard is perhaps one of the best value picks on the TSX right now.
This company’s a key global player gas station and convenience store business. Indeed, over the years, Couche-Tard has developed best practices in its sector, consolidating relatively fragmented corners of the market. The result has been greatly improved returns for investors and impressive cash flows.
Couche-Tard has funneled these higher cash flows into additional acquisitions, share buybacks, and dividends over the years. However, it appears that with a lack of deals available at the right price, Couche-Tard is going to focus more on organic growth from here.
For long-term investors looking at Couche-Tard’s track record of growth, that’s not a bad thing.
Manulife
Manulife is one of my top picks in the insurance industry for a number of reasons.
From a growth perspective, Manulife’s exposure to China is something I view as a key driver. The company recently announced that it will be taking over a higher percentage of its joint partnership in Asia. I think this is simply a growth lever that’s too juicy to ignore for long-term investors.
Additionally, the company’s fundamentals are excellent. Manulife provides investors with a solid balance sheet and an excellent track record of managing risk well. This has allowed Manulife to pay out a sector-beating dividend yield of 4.5%. For long-term investors, these fundamentals are hard to find in today’s market. Manulife is certainly a company that deserves a look.
Killam Apartment REIT
Killam is one of the top REITs on my watch list right now. This REIT focuses on developing residential and mixed-use properties across Canada. In particular, Killam is focused on Atlantic Canada, a region I view as underserved and holding excellent value.
In addition to holding a portfolio of real estate that’s well-located, Killam’s positioning couldn’t have been stronger through the pandemic. Folks need a place to live, and paying rent is a higher priority than most other things. Additionally, generous government support programs have improved Killam’s outlook to a degree I didn’t think was possible initially.
Moving past the pandemic, Killam is a company providing investors with meaningful income and capital appreciation potential. Indeed, this is a slow-and-steady stock I can see providing investors with maybe 10% a year over the long term. That’s certainly not bad and makes for an intriguing opportunity for those looking for long-term value.
