As the Canadian stock market continues to soar to new heights in 2024, it’s becoming increasingly challenging for value investors to find high-quality stocks trading at bargain prices. While many companies have already seen their share prices surge, leaving only a few opportunities for investors hunting for undervalued gems.
However, if you look closely, there are still a handful of undervalued stocks on the Toronto Stock Exchange that have strong fundamentals, promising growth potential, and surprisingly low valuations. In this article, I’ll help you identify two such dirt-cheap Canadian stocks that could deliver strong returns on investments in the long run.
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Nutrien stock
Despite a 21% increase in the TSX Composite Index so far in 2024, shares of the Canadian crop inputs and services provider Nutrien (TSX:NTR) have plunged by 13.4% year to date. With this, NTR stock now trades at $64.55 per share with a market cap of $32 billion. The recent decline in its stock price, however, has driven its annualized dividend yield higher, which currently stands at an attractive 4.7%.
The ongoing challenges in the global crop nutrient market have indeed affected Nutrien’s financial performance in the last couple of years, leading to a selloff in its stock. However, a deeper dive into its latest financial results showed several promising signs of gradual recovery.
For example, Nutrien reported record potash sales volumes of 11.1 million tonnes during the first nine months of 2024, showcasing its ability to adapt to changing global demand trends. Its efficient six-mine network and continued advancements in automation also helped the company achieve reduced potash operating costs.
While the drop in net profit to US$25 million in the September quarter may disappoint investors, it’s important to note that Nutrien is investing heavily in initiatives to strengthen its market position even amid this challenging phase. These efforts include optimizing its capital expenditures and targeting US$200 million in annual cost savings by 2025, ahead of schedule. Although short-term market pressures have dragged Nutrien stock down in the last two years, operational efficiencies and proactive strategies to navigate challenging market conditions could help it emerge stronger when the global crop nutrient market stabilizes.
BlackBerry stock
Another fundamentally strong Canadian stock that’s trading at a big bargain right now is BlackBerry (TSX:BB). Its stock currently trades at $3.63 per share with a market cap of $2.2 billion after witnessing 21% value erosion so far in 2024.
The Waterloo-based enterprise software company mainly generates revenue by providing cybersecurity and Internet of Things (IoT) solutions to private and public organizations across the globe. In the quarter ended in August 2024, BlackBerry reached a major milestone by achieving breakeven adjusted earnings, taking the first step toward sustainable profitability after years of struggles.
Moreover, BlackBerry’s growing focus on leveraging its expertise in artificial intelligence (AI) and machine learning to enhance its cybersecurity and IoT offerings is showing promise. Its Cylance platform uses AI-driven solutions to proactively identify and prevent cyber threats. Similarly, its advanced vehicle data platform IVY utilizes AI and machine learning to process vehicle data in real time. These developments not only have the potential to exponentially accelerate its financial growth in the coming years but also could drive its stock price massively higher as the demand for advanced cybersecurity and IoT solutions continues to grow globally.
