As is often the case in the stock market, valuations can vary widely across different stocks and sectors unless there’s a major bull run or a sharp market correction. While many Canadian stocks have performed well over the last year and are trading at 52-week highs, plenty of high-quality stocks are trading significantly undervalued for investors to buy right now.
These situations create great opportunities for investors to put their money to work and buy top stocks while they’re undervalued. However, not every cheap stock is a good investment, making it crucial to know which ones are actually worth buying and holding for the long haul.
So, with that in mind, if you’ve got cash that you’re looking to invest today, here are two of my top undervalued stocks to buy right now.
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A top recovery stock that could finally turn the corner this year
It’s no secret that Cineplex (TSX:CGX) is one of the last stocks on the TSX to recover from the impacts of the pandemic.
However, while the entertainment stock has faced many headwinds since the pandemic ended, such as a lack of consistent content and Hollywood strikes, 2025 might finally be the year when it finally recovers.
This week, Cineplex reported its fourth-quarter earnings from 2024, and revenue came in essentially as analysts had expected at $363 million.
More importantly, though, it reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $84.7 million, which beat analyst expectations by roughly 5% due to better management of its expenses.
A 5% beat isn’t that significant of an achievement, considering how cheap Cineplex is and how much it could still recover. However, it’s certainly a strong start to the year for Cineplex. Furthermore, looking forward, with several highly anticipated films set to be released this year, such as Captain America, Snow White, Mission Impossible, Superman, and many more, the stock has a tonne of potential to see a strong recovery.
Most importantly, though, Cineplex is one of the top undervalued stocks to buy now. Its forward enterprise value (EV)-to-EBITDA ratio is just 7.4 times today. That’s much cheaper than its average forward EV-to-EBITDA ratio over the last five years of 10.4 times and its average forward EV-to-EBITDA ratio in the five years leading up to the pandemic of 11.1 times.
Management seems to believe so as well. In fact, from August to December of 2024, Cineplex bought back over 620,000 shares, which should also help to boost the share price going forward.
So, if you’re looking for an ultra-cheap stock to buy now before a major rally, Cineplex looks significantly undervalued and has the potential to see a meaningful recovery rally throughout the rest of 2025.
A top defensive growth stock trading undervalued to buy right now
While Cineplex is incredibly cheap and has significant recovery potential this year, there’s no denying it comes with higher risk. So, if you’re looking for a more reliable investment, a defensive growth stock like Jamieson Wellness (TSX:JWEL) offers stability while still offering compelling long-term growth potential.
Jamieson is a more reliable stock because it’s a health and wellness company that sells vitamins and other health supplements that many of its customers would consider essential.
Furthermore, since going public in July of 2017, Cineplex has never reported a single year where its sales didn’t increase, showing it can continue to execute well despite the significant macroeconomic headwinds it might face.
Therefore, the fact that it trades cheaply makes it one of the top undervalued stocks to buy right now.
For example, its forward price-to-earnings (P/E) ratio of 17.9 times is currently well below its five-year average of 22.2 times. Furthermore, that P/E ratio isn’t just low compared to how it’s traded in the past. It’s also reasonably priced for a reliable defensive growth stock.
Plus, in addition to its cheap valuation, its dividend yield has climbed to 2.7% with the stock trading undervalued, giving investors the chance to buy now and lock in a yield that’s significantly higher than its five-year average of 1.96%.
So, if you’ve got cash on the sidelines and are looking to take advantage of the current market environment, there’s no question Jamieson is one of the best stocks you can buy today.
