When it comes to value, it’s not just about the current share price. Investors need to dig deeper, finding those diamonds that shine through all that rough. So, today, let’s look at three Canadian stocks that warrant a dive into the deep.
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MFC stock
Manulife Financial (TSX: MFC) has been proving itself as one of the most reliable financial institutions in Canada, with a strong presence in both domestic and international markets. The Canadian stock reported solid earnings for the full year of 2024, with core earnings climbing to $7.2 billion, reflecting an 8% increase from the previous year. Net income attributed to shareholders came in at $5.4 billion, up 5% year over year. This continued growth highlights Manulife’s ability to navigate market uncertainties while capitalizing on its diversified financial services. The Canadian stock’s valuation remains attractive, with a forward price-to-earnings (P/E) ratio of 10.09, so the Canadian stock trades at a discount.
One of the key drivers of Manulife’s success has been its performance in Asia, where demand for insurance and wealth management solutions continues to grow. The Asia segment saw a remarkable 27% jump in core earnings, driven by increased customer engagement and expansion in key markets. This growth trend indicates that Manulife’s long-term strategy of focusing on Asia’s rising middle class is paying off. Meanwhile, the Canadian stock maintains a strong dividend yield of 4.16%. With a payout ratio of 56.34%, there is still room for dividend growth, reinforcing Manulife’s position as an undervalued yet stable long-term investment.
AEM stock
Agnico Eagle Mines (TSX: AEM) is another Canadian stock that appears undervalued despite its recent strong performance. The gold miner reported record annual gold production and free cash flow for 2024, reinforcing its reputation as a leader in the precious metals industry. Agnico produced 3.4 million ounces of gold last year, setting a new high for the Canadian stock. Revenue reached $8.29 billion, marking a 26.6% increase from the previous year, while net income climbed to $1.9 billion. This significant revenue growth was supported by higher gold prices and operational efficiency, allowing the company to maximize margins while keeping costs under control.
Agnico’s financial position has also strengthened considerably, with free cash flow reaching a new peak. The Canadian stock reduced its debt levels, bringing its total debt down to $1.28 billion, representing just 6.16% of its equity. This low debt-to-equity ratio is a positive sign for investors, as it indicates a strong financial foundation and minimal leverage risk. Furthermore, Agnico’s dividend remains an attractive component of its investment case. With a forward annual dividend rate of $2.31 and a yield of 1.67%, the Canadian stock continues to reward its shareholders while maintaining a conservative payout ratio of 42.33%.
Air Canada
Air Canada (TSX: AC) is another name that continues to trade below its potential despite a significant rebound in the airline industry. The Canadian stock posted a record annual revenue of $22.3 billion in 2024 — a testament to its ability to navigate post-pandemic recovery while adapting to shifting travel demand. The airline’s profitability has also improved significantly, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) expected to reach between $3.4 billion and $3.8 billion in 2025, thereby exceeding analysts’ expectations. Strong international travel demand and the return of business travellers have helped drive Air Canada’s financial recovery, with the Canadian stock noting particular strength in transatlantic and Asia-Pacific routes.
Despite these positives, Air Canada has encountered some headwinds, including rising labour and maintenance costs. The Canadian stock also reported foreign exchange losses due to a weaker Canadian dollar, which has impacted its bottom line. However, Air Canada has continued to focus on cost-cutting measures and operational efficiencies to offset these challenges. The company has also been expanding its network, adding new international routes to capitalize on growing demand for long-haul travel. This strategic expansion is expected to contribute to further revenue growth in the coming quarters.
Bottom line
Taken together, these Canadian stocks each present compelling cases for investment in 2024. While each of these stocks comes with its own risks, current valuations suggest teach are trading at discounts relative to their intrinsic value. For investors looking to capitalize on undervalued opportunities in the Canadian market, these names are worth serious consideration.
