2 Undervalued Canadian Stocks to Buy Before it’s Too Late

Canadian stocks are on fire, and I’m still buying. These two top companies are trading at very attractive prices right now.

| More on:
Hand writing Time for Action concept with red marker on transparent wipe board.

Image source: Getty Images

It’s been a great year for Canadian investors so far. The S&P/TSX Composite Index is nearing a 20% gain and doesn’t seem to be slowing down just yet.  

The Canadian stock market has been riding this incredible bull run since the market crash in early 2020. Since then, it’s been a steady trend upward for most of those invested in Canadian stocks. 

I’m as bullish as the next investor in the long-term growth of the stock market, but that doesn’t mean I’m completely ignoring the market’s valuation today. It’s no secret that the TSX is full of high-priced growth stocks trading at sky-high valuations. 

Just because the market as a whole seems overpriced doesn’t mean you need to be sitting on the sidelines, though. I’ve reviewed two top Canadian stocks that are trading at very attractive prices right now. 

Brookfield Renewable Partners

If you were thinking of increasing your exposure to the renewable energy sector, now’s the time. Many of the top green energy stocks on the TSX are trading below all-time highs, as the sector as a whole has been going through a selloff in recent months. 

Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) would be my pick if I had to own only one renewable energy stock. The company provides its shareholders with broad diversification to the growing sector, market-beating growth potential, and an impressive dividend yield

Shares are down 20% from all-time highs, but the stock is still up a market-beating 125% over the past five years. And that’s not even including the Canadian stock’s very respectable 3% dividend yield.  

From a valuation perspective, Brookfield Renewable Partners isn’t exactly a cheap stock. But considering the growth that it has put up in recent years and what it is expected to deliver over the next decade, this is a dip that I’d strongly encourage long-term investors to take advantage of.

Air Canada

My opinion on Canada’s largest airline, Air Canada (TSX:AC), has changed this year. I was originally bearish — not specifically on Air Canada but on the entire air travel industry. 

The Canadian stock lost 70% of its value in barely over a month during the COVID-19 market crash. The uncertainty in the future of air travel was the main reason why I wasn’t interested in Air Canada. But as we’re slowly understanding how to live alongside the COVID-19 virus, the air travel experience doesn’t look all that different. 

The airline industry hasn’t historically been the most-rewarding area of the market for North American investors. Air Canada has been somewhat of an exception to that. 

Even with a massive drop in 2020, Air Canada stock has still more than doubled the returns of the Canadian market over the past five years. It’s also more than a 10-bagger going back a decade. There aren’t many Canadian stocks on the TSX that can compete with that type of growth.

Air Canada is still trading 50% below all-time highs, even after its impressive run since early 2020. We’re already witnessing a return to air travel in Canada so I don’t think it will be long before the Canadian stock is back to all-time highs.

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 Brookfield Renewable Partners. The Motley Fool has no position in any of the stocks mentioned.

More on Energy Stocks

oil and natural gas
Energy Stocks

Could Suncor Stock Soar Into 2024?

Suncor has underperformed its peers in the past few years. Is a rebound on the way?

Read more »

A lake in the shape of a solar, wind and energy storage system in the middle of a lush forest as a metaphor for the concept of clean and organic renewable energy.
Energy Stocks

1 Energy Stock I’d Buy Over Enbridge Stock Right Now

Enbridge stock had its time in the sun, but after years of barely any share movement, I would go to…

Read more »

Gas pipelines
Energy Stocks

Better Buy: Enbridge Stock or TC Energy?

Enbridge and TC Energy have delivered outsized gains to shareholders in the last 20 years. But which TSX energy stock…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Dividend Stocks

2 Top Canadian Energy Stocks to Buy Right Now

Blue-chip TSX stocks like these two Canadian energy sector giants can help you generate substantial long-term wealth growth.

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

2 Revolutionary Canadian Clean Energy Stocks to Power Your Portfolio

Going green is the energy industry’s future. Here are two Canadian energy stocks to own to become part of the…

Read more »

A worker overlooks an oil refinery plant.
Energy Stocks

Energy Sector Rebound: Is Suncor Stock a Buy Today? 

After the OPEC oil cut, oil prices are rising again. Is this a rebound in energy stocks? Is Suncor stock…

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Energy Stocks

The U.S. Stocks Every Canadian Investor Needs to Know About

Boeing, UGI Corporation, and Exxon Mobil are three U.S. stocks I'd buy today.

Read more »

Silhouette of businessman sit on chair and hold a cigar and looking at the city in night.
Energy Stocks

Passive Income: How to Make $104 Per Month Tax Free in 20 Years

By simply choosing the right stock, and investing in it on a consistent basis, you can create massive passive income…

Read more »