Dirt-cheap value stocks may be a tad tougher to find, with the TSX Index close to all-time highs. Sure, there’s been quite a bit of recent strength in Canadian stocks, but if you know where to look, there is still a wide assortment of stocks that can offer investors a decent bang for their buck. Of course, deep value investing isn’t going to be for everyone, especially those who don’t have at least three years to wait for a turnaround.
Indeed, comeback plans and strategic pivots certainly do not happen overnight. And even if there’s a new top boss running the show, it can take more than 18 months for the new manager to really make his or her mark. In this piece, we’ll check in on two intriguing value stocks that I think are still worth picking up for value investors willing to play the long-term game. While the following trio of stocks may be less timely, I see them as trading at a sizeable discount at current levels.
As always, ensure you put in the fundamental analysis before stepping in because, sometimes, low valuation multiples don’t necessarily entail deep undervaluation. In any case, I view the following names as overdue for a “correction to the upside,” even if the TSX Index rally falters, perhaps in the face of a Canadian recession and an uptick in unemployment in the second half of 2025.
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TD Bank
It didn’t take too long for TD Bank (TSX: TD) stock to go from a laggard to a leader, with shares now an impressive 22% year to date. At just north of $93 per share, TD Bank investors seem ready to focus on the more promising road ahead as the new CEO looks to put the $160 banking juggernaut back on the growth track.
Of course, the money-laundering headlines and headwinds may be yesteryear’s news, but TD still has a long way to go in terms of regaining everyone’s trust. With a strong second-quarter showing and a seriously impressive comeback plan, I’m inclined to pound the table on TD.
The new CEO, Ray Chun, is off to an impressive start. And I think the big bank has more outperformance up its sleeves as Mr. Chun takes steps to make TD a fantastic place to bank again. At 9.69 times trailing price-to-earnings (P/E) to go with a 4.52% dividend yield, I consider the Big Six bank to be a deep-value play, even as shares heat up going into June. TD is back. And I think the rally has legs to take it past $100 per share over the medium term.
Air Canada
Air Canada (TSX: AC) has been flying under the radar of many Canadian investors, many of whom have forgotten about the name after its horrid COVID crash. Though it’s proven a slog for the Canadian airline in the past five years, I think there’s more reason for optimism, even as economic headwinds look to weigh on air travel demand.
Of course, the airlines have always been quite choppy in the face of macro headwinds. And while a recession could mute air travel for yet another year, I think the stock is cheap enough to buy despite the illuminated fasten-your-seatbelt sign. Shares look cheap, and management has demonstrated it knows how to adapt to the ever-changing tides. At less than $19 per share, I’d be inclined to board the value play right here.
