2 Top Canadian Stocks to Buy While They’re Still Cheap

There’s no shortage of high-priced stocks on the TSX. Here are two top picks to buy today that are trading at an opportunistic discount.

| More on:
value for money

Image source: Getty Images

It’s hard to believe that the Canadian market is up 70% in less than two years. It’s been almost a straight ride up for investors after the market crashed in March 2020 due to the pandemic. 

We’re still not yet past the COVID-19 pandemic, but the market is full of bullish investors, as we’re slowly nearing the country’s reopening. 

The current bull run has sent many TSX stocks to sky-high valuations. It’s not uncommon for a top growth stock to be trading at a price-to-sales ratio above 30. Some of the leaders in the tech sector are even trading in a range above 50. 

I’m as bullish as the next Canadian investor on the likes of Shopify and Lightspeed, but the current market’s valuation has me searching for more value-oriented buys. 

If you’re looking to pick up shares of an undervalued stock, you should check out these two Canadian companies. 

Northland Power

Renewable energy investors enjoyed a year full of gains in 2020. The newly elected U.S. president Joe Biden sent green energy stocks soaring even higher towards the end of 2020. It’s been a different story this year, though.

The same U.S. president is still at the helm, but renewable energy stocks have come to a halt this year. Many leaders in the sector have not only trailed the market’s returns this year but are trading at a loss.

It’s not a surprise to see the sector go through a correction after a strong couple of years. So, if you’re a long-term investor, now would be a wise time to pick up shares of a discounted renewable energy stock. 

At a market cap of close to $10 billion, Northland Power (TSX:NPI) is one of the largest renewable energy providers in Canada. Not only is it one of the top players in the country, but it has an international presence as well with operations in North and South America, Europe, and Asia.

Similar to other leaders in the sector, Northland Power produces a range of different renewable energy options. Wind, solar, and hydro are three areas of the market that Northland Power specializes in.

Shares of Northland Power are up a market-beating 75% over the past five years. And that’s not even factoring in the stock’s $1.20 dividend, either.

Canadian investors in search of just one renewable energy stock to own should seriously consider Northland Power. Whether you’re looking for growth, value, or passive income, this stock deserves a spot on your watch list.

Sun Life Financial

Insurance is one industry that I don’t see going away anytime soon. It’s certainly not the fastest-growing area of the market, but that doesn’t mean an insurance leader doesn’t belong in a long-term investment portfolio.

Similar to Northland Power, Sun Life Financial (TSX:SLF)(NYSE:SLF) offers a lot to its shareholders. Stability, value, and a top dividend would be the three main reasons I’d have Sun Life on my watch list today. 

You can’t count out market-beating growth, too, though — especially when you factor in the 3.3% dividend yield, Sun Life is no stranger to outperforming the Canadian market.

You’d be hard-pressed to find another market-beating stock trading at a cheaper price than Sun Life. Shares are valued at a forward price-to-earnings ratio barely above 10. Considering it’s up a market-beating 60% over the past five years and yields more than 3%, I’d say it’s trading at an absolute bargain price.

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 Nicholas Dobroruka owns shares of Lightspeed POS Inc and Shopify. The Motley Fool owns shares of and recommends Lightspeed POS Inc and Shopify. The Motley Fool recommends Lightspeed POS Inc. and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »