Even though the TSX Composite Index has surged 23% over the past year, many high-quality stocks remain undervalued. While growth stocks have led the broader market rally, some of the best long-term opportunities lie in overlooked value stocks with strong fundamentals, solid earnings potential, and attractive valuations.
As macroeconomic challenges ease and consumer spending recovers, these undervalued stocks could experience a significant rebound, which could reward patient investors with handsome returns. In this article, I’ll highlight two top Canadian value stocks that have the potential to be among the best-performing investments through 2030.
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Alimentation Couche-Tard stock
The first undervalued stock that could see strong returns through 2030 is Alimentation Couche-Tard (TSX:ATD). This company operates over 16,800 convenience stores across 31 territories, with its well-known Circle K and Couche-Tard brands. While it’s best recognized for fuel stations and convenience retail, it has built a reputation for smart acquisitions and operational efficiency.
Currently, ATD stock trades at $75.60 per share, with a market cap of $71.6 billion. It’s down 5.1% in the last three months, but long-term investors know this stock has been a winner as it surged by 68% over five years and delivered a strong 221% return in the last decade. It also offers a quarterly dividend with a 1.1% annualized yield, making it appealing to long-term investors.
In the second quarter (ended in October 2024) of its fiscal year 2025, Couche-Tard’s revenue jumped 6% YoY (year over year) to US$17.4 billion, but adjusted net earnings fell 9.8% from a year ago to US$705 million due to lower fuel margins and cautious consumer spending. Despite this, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) registered a 2.4% positive growth, showing the resilience of its business model.
Couche-Tard is expanding aggressively with 270 new GetGo locations in the U.S. and a focus on private-label products and promotional fuel pricing. This consistent expansion could improve its financial growth trends in the coming years, which may lead to a sharp recovery in its share prices.
Magna International stock
Now, let’s talk about Magna International (TSX:MG), a key player in the global auto parts industry with a strong presence in vehicle manufacturing and innovative mobility solutions. Some headwinds, including supply chain disruptions and fluctuating vehicle production, have affected its financial growth in recent quarters. As a result, MG stock has dived by 27% over the last year to currently trade at $55.91 per share with a market cap of $15.8 billion. It also offers an attractive 5% annualized dividend yield at this market price.
In the third quarter of 2024, Magna posted US$10.3 billion in sales, slightly down due to lower global vehicle production. Nevertheless, it still managed to increase net profit to US$484 million, partly due to its focus on strategic cost reductions.
Despite short-term challenges, Magna is investing heavily in next-gen vehicle technologies, electrification, and active safety systems. The demand for such products and technological solutions is expected to surge in the coming years, which could significantly improve its financial growth and lead to a solid rebound in MG stock.
