Finding Value in Canadian Stocks After 2024’s Big Rally

For investors with lots of extra cash lying around after the big rally in 2024, here are a couple of Canadian value stock ideas you may be interested in.

| More on:
profit rises over time

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a banner year for the Canadian stock market in 2024, it’s no surprise that investors are feeling cautious. With a 17% rally, the Canadian stock market enjoyed one of its best years in recent memory. For those holding index funds or exchange-traded funds (ETFs), some might have already taken profits, wary of a potential market pullback. But for stock pickers, undervalued stocks poised for growth are still waiting to be uncovered by you. Here’s how to identify potential value in the Canadian market post-rally.

Blue-chip bargain: TD stock

Nothing beats a solid, blue-chip stock that offers both value and a steady dividend stream. Toronto-Dominion Bank (TSX:TD) is a prime example of a stock currently trading below its intrinsic value, making it a potential buy for patient investors. While the bank has faced challenges recently – most notably the anti-money laundering case affecting its growth in the U.S. – the current market price presents an opportunity.

TD Bank’s share price has underperformed compared to its peers, primarily due to the headwinds in the U.S. market. However, for long-term investors, this provides a chance to buy a proven dividend stock at a discount. At the time of writing, TD’s dividend yield stands at an impressive 5.3%, well above its historical average of around 4% over the past decade. This indicates the stock is undervalued, offering not just a steady income stream but also potential for future price appreciation.

TD Bank’s fundamentals remain solid, anchored by resilient earnings. At $79.31 per share at writing, TD stock trades at a relatively low price-to-earnings (P/E) ratio of 10.1. This is more than 10% below its long-term average, suggesting a reversion to the mean could lead to substantial returns over the next three to five years. A return to historical valuation levels could deliver annual gains of approximately 12% – an attractive prospect for a blue-chip stock.

Industrial real estate opportunity: Granite REIT

Another intriguing opportunity is Granite REIT (TSX:GRT.UN), a high-quality industrial real estate investment trust (REIT) with a diversified portfolio of 138 income-producing properties and five development sites.

The stock recently experienced a meaningful pullback, dipping more than 13% from its 2024 peak of $80 per unit. At its current price of $69.18, analysts believe Granite is trading at a near 22% discount to its fair value, which presents strong upside potential in the near term.

Granite REIT’s fundamentals remain robust, with manageable debt levels and a well-diversified portfolio that spans across multiple sectors of industrial real estate. The trust has also maintained a sustainable payout ratio of 62% of its funds from operations, making its 4.9% yield not only attractive but secure.

In addition to offering an attractive yield, Granite REIT has a history of raising its distribution, making it an appealing option for income-focused investors. The stock’s recent dip could be seen as a temporary setback, and the potential for a 28% upside in the near term makes it a compelling choice for those looking to invest in the industrial real estate sector.

The Foolish investor takeaway: Navigating the post-rally landscape

After a significant market rally like the one seen in 2024, finding value can feel like searching for needles in a haystack. But for diligent investors, there are opportunities in stocks that have been temporarily overlooked or undervalued. Both Toronto-Dominion Bank and Granite REIT are examples of Canadian stocks that offer solid fundamentals, attractive dividends, and the potential for future growth. While caution is always warranted after a big rally, these stocks could provide the stability and upside investors are looking for in the years ahead.

Should you invest $1,000 in Granite Real Estate Investment Trust right now?

Before you buy stock in Granite Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Granite Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Kay Ng has positions in Granite Real Estate Investment Trust and Toronto-Dominion Bank. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »