After declining sharply in the previous three months, the Canadian stock market witnessed a sharp recovery in November, making it a great time to look at Canadian value stocks. If you don’t know it already, value stocks are shares of companies that are selling for less than what they’re really worth. That’s why I call them hidden gems. For long-term investors, any short-term decline in fundamentally strong stocks could be an opportunity to buy valuable stocks at a lower price.
Over time, these stocks can offer really impressive returns as the market eventually realizes their true value. This is especially beneficial for those who are investing for the long term. By choosing value stocks now, when the market is just starting to bounce back, you can benefit from the market’s upward trajectory. That’s why investing in value stocks in this recovering market can lead to some eye-popping profits in the long run, making them worth adding to your investment portfolio now.
In this article, I’ll highlight two top Canadian value stocks I find worth considering in December 2023.
Air Canada stock
Air Canada (TSX:AC) stock has been on a downward trajectory since the first quarter of 2020 when the global pandemic-related worries started taking a big toll on investors’ sentiments. Even as the largest Canadian passenger airline company has witnessed a spectacular, post-pandemic financial recovery in the last year, its share prices haven’t seen any appreciation. As a result, AC stock currently trades at $17.63 per share with a market cap of $6.3 billion, down 64% from its pre-pandemic year 2019’s closing level.
In the first three quarters of 2023 combined, Air Canada’s total revenue jumped 40.3% YoY (year over year) to $16.7 billion with the help of consistently growing air travel demand. Stronger demand also helped the company deliver adjusted net earnings of $4.73 per share during these nine months against its adjusted loss of $2.46 per share during the same period of the previous year.
Its financial growth trends are likely to improve further, as macroeconomic uncertainties gradually subside in the future. The growing strength of its air cargo business could also support this growth. These factors make Air Canada an amazing Canadian value stock to buy today and hold for the long term.
Bombardier stock
Bombardier (TSX:BBD.B) is another quality Canadian stock I find to be undervalued in December 2033. The share prices of this Dorval-headquartered aircraft maker currently trade at $46.86 per share with a market cap of $4.6 billion after sliding by 10.4% in 2023.
Just like Air Canada, Bombardier’s financials have also significantly improved in the ongoing year, but its stock remains underappreciated. To give you an idea about that, the company posted a 17.1% YoY increase in its total revenue in the first three quarters of 2023 to US$5 billion with the help of growing aircraft deliveries and strengthening aftermarket segment. As a result, its adjusted earnings in these nine months stood at US$2.51 per share, showcasing massive improvement over its adjusted loss of US$1.33 per share in the first three quarters of 2022.
As Bombardier continues to focus on increasing its aircraft deliveries further in the coming years, its financial growth trends will likely continue witnessing improvements, which should help its share prices rise.
