With interest rates declining in Canada and the United States, the investment landscape continues to shift, opening up opportunities for long-term investors. It’s not uncommon to see lower borrowing costs drive growth across various sectors, making now an excellent time to evaluate undervalued Canadian stocks.
The key is to find high-quality companies that are trading below their intrinsic value. Whether these stocks are poised for recovery, future growth, or both, they can help you take advantage of the improving economic environment as interest rates continue to decline.
So, with that in mind, here are three top Canadian stocks to buy now that are undervalued and ready to benefit as the market environment improves.
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A top Canadian gold stock to buy while it’s ultra-cheap
In the precious metals space, B2Gold (TSX: BTO) stands out as one of the most undervalued Canadian stocks you can buy today.
B2Gold is an ideal investment due to its operations of high-quality, low-cost mines in regions like Mali, Namibia, and the Philippines, generating substantial free cash flow even during times of economic uncertainty.
Furthermore, as interest rates decline, gold prices typically strengthen, which is something we’ve already begun to see in 2024, making B2Gold an attractive investment heading into 2025.
In addition, the company’s robust financial position, with no net debt and significant cash reserves, further supports its ability to weather market volatility and capitalize on rising gold prices.
Therefore, while B2Gold trades cheaply as a result of some temporary strikes at its mines, it’s certainly one of the best Canadian stocks to buy now.
Plus, not only can you buy B2Gold at a significant discount today, but the stock also pays one of the best dividends in the sector, with its current dividend yield sitting at more than 6.4%.
Therefore, if you’re looking for top Canadian stocks to buy now before interest rates get any lower, not only is B2Gold cheap, but it can also help generate significant passive income for your portfolio.
A residential REIT set to benefit from lower interest rates
In addition to gold stocks, which can see a boost from lower interest rates, real estate could also see a significant boom as rates decline.
There are many high-quality Canadian real estate investment trusts (REITs) trading undervalued, but one of the cheapest and best Canadian stocks to buy now has to be InterRent REIT (TSX: IIP.UN).
Declining interest rates are advantageous for real estate stocks like InterRent since lower borrowing costs reduce financing expenses, allowing the company to expand its portfolio more efficiently and improve its profitability.
Additionally, demand for rental housing remains strong across the country, particularly in urban areas where housing affordability challenges persist.
Therefore, as interest rates continue to fall, and with InterRent still trading well off its all-time high, it’s one of the best Canadian stocks to buy now.
Not only does it trade at a forward price-to-funds-from-operations (P/FFO) ratio of just 15.5 times today, much lower than its five-year average of 24.6 times, but its dividend yield has also risen significantly to just shy of 4%, well above its five-year average forward yield of just 2.6%.
Therefore, while this high-potential Canadian stock trades so cheaply, it’s one of the best stocks to buy now.
A top Canadian growth stock to buy now
Finally, in the healthcare sector, WELL Health Technologies (TSX: WELL) is one of the most promising Canadian stocks to buy now.
WELL operates an impressive portfolio of digital health solutions, telehealth services, and healthcare clinics, with it being the largest owner/operator of outpatient medical clinics in Canada.
In just the last few years, it’s grown rapidly both organically and by acquisition, which is what’s led to the impressive jump in both its revenue and profitability.
Furthermore, as interest rates decline, WELL will benefit from cheaper capital, making it easier to fund new acquisitions. Lower rates should also improve market sentiment, which can drive up its share price. Finally, cheaper capital will also help other companies ramp up their own acquisitions, making it easier for WELL to sell off some of its assets and unlock shareholder value.
Therefore, while one of the best Canadian growth stocks continues to trade below its fair value, it’s easily one of the best investments to buy now.
