Underpriced and Overlooked: 2 Canadian Stocks Ready to Rally

Momentum is underway for these two Canadian stocks, and yet both still trade at share prices that are quite low given their future growth.

| More on:
Investor wonders if it's safe to buy stocks now

Source: Getty Images

There have been a few stocks in the last few years that made a big name for themselves in a short period of time. However, many of these afterwards went through a burst in share price, with investors all but forgetting about them in the process.

Yet, there are two companies that continue to be underpriced and overlooked after this period of time. Today, we’re going to look at why these Canadian stocks are ready to rally.


Shares of Nutrien (TSX:NTR) surged in the last few years as the demand for potash all of a sudden climbed. This came mainly from sanctions against Russia after the invasion of Ukraine, as Russia is a large producer of inexpensive potash.

However, Nutrien stock went on to crash in share price when investors wanted to take their returns back in 2022. Potash prices slumped, as did other fertilizers, and the company didn’t look as strong as it once did.

However, that’s been changing. Nutrien stock has been experiencing strong momentum in the last few quarters, which could mean it’s ready to rally. During the second quarter of 2023, the stock remained down with the volatility of global crop input markets. This caused net earnings of US$448 million during the second quarter, with full-year 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) predicted to be between US$5.5 and US$6.7 billion.

By the third quarter, the stock delivered record potash sales volumes as demand increased. It generated US$82 million in net earnings, with its adjusted EBITDA guidance narrowing to between US$5.8 and US$6.4 billion for the year. The fourth quarter then reflected a stronger fertilizer market, with net earnings of US$176 million and full-year adjusted EBITDA of US$6.058 billion falling within guidance range.

What’s more, the company expects to achieve more growth in 2024. It now believes it can hit between US$1.65 and US$1.86 billion in retail adjusted EBITDA. With first-quarter earnings around the corner, the company could certainly be in for another surge in share price.


Another company that’s been seeing some momentum and interest is Magna International (TSX:MG). Again, excitement fuelled this company’s growth, with shares climbing as interest in electric vehicles (EV) rose.

However, that interest has shrunk and indeed collapsed. And so has the share price of Magna stock in the meantime — especially given that the company had gone through so many supply-chain disruptions during and even after the pandemic.

And yet, the stock has been making some moves to interest investors once again. In fact, it now looks quite valuable trading at 11.7 times earnings. Magna stock reported sales $10.98 billion in the second quarter, with net income of $339 million. The third quarter saw it shrink to $10.69 billion, with net income rising to $394 million.

By the fourth quarter, sales had fallen down further to $10.45 billion, with net income down as well to $271 million. That being said, the year was strong, seeing total sales of $42.8 billion and net income of $1.2 billion. Sales are expected to continue growing in 2024, with sales expected to be between $43.8 and $45.4 billion in 2024. So, with yet another overlooked stock, this is one investors may want to bring their interest to once more.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Magna International and Nutrien. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Stocks for Beginners

After Hitting 52-Week Highs, TIH Stock Is Down: Here’s What Happened

TIH (TSX:TIH) stock has seen a huge rally in 2023, but dropped earlier in April as an analyst weighed in…

Read more »

clock time
Dividend Stocks

Is Now the Right Time to Buy goeasy Stock? Here’s My Take

Shares of goeasy stock (TSX:GSY) slumped last year on a federal announcement, but that has all changed since then.

Read more »

Bank sign on traditional europe building facade
Stocks for Beginners

1 Magnificent TSX Dividend Stock Down 22% to Buy and Hold Forever

This dividend stock may be down 22% from all-time highs, but is up 17% in the last year alone. And…

Read more »

Different industries to invest in
Stocks for Beginners

The Best Stocks to Invest $1,000 in Right Now

These three are the best stocks your $1,000 can buy, with all seeing huge growth in the last year, but…

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

What to Watch When This Dividend Powerhouse Shares Its Latest Earnings

Methanex stock (TSX:MX) had a rough year, which ended on a bit of a high note, though revenue was down.…

Read more »

Car, EV, electric vehicle
Tech Stocks

Why Tesla Stock Surged 16% This Week

Tesla stock (NASDAQ:TSLA) has been all over the place in the last year, bottoming out before rising after first-quarter earnings…

Read more »

Growing plant shoots on coins
Stocks for Beginners

2 TSX Growth Stocks That Could Turn $10,000 Into $23,798 by 2030

Are you looking for growth stocks? These two are proven winners with even more room to grow in the years…

Read more »

grow dividends
Dividend Stocks

BCE Stock Needs to Cut Its Dividend – Now

BCE stock (TSX:BCE) has seen shares fall drastically with more debt rising, so why on earth did it increase its…

Read more »