In the first half of 2025, dip buyers emerged victorious, profiting handsomely by buying stocks that declined after Donald Trump threatened to impose steep tariffs on most of the world’s countries. Although Trump’s tariffs would probably have led to an economic catastrophe had they remained, Trump actually backed off on (or at least paused) most of them. As a result, stocks started climbing after Trump backtracked, leading to gains for dip buyers.
The problem now is that stocks — particularly U.S. stocks — are once again very expensive. The big U.S. tech stocks trade at over 40 times earnings as a group. Even non-tech U.S. sectors are pretty pricey, and the Canadian markets are at all-time highs, trading at about 20 times earnings on average. The buying is not as good now as it was in April. Nevertheless, some opportunities remain in certain sectors. In this article, I explore three beaten-down stocks that could repeat the feat that dip buyers achieved in 2025.
Couche-Tard
Alimentation Couche-Tard Inc (TSX:ATD) is a dip buyer’s best friend. The company’s stock has been taking a beating since early 2024 when it put out a disappointing series of earnings releases. The stock’s beating was extended when the company made a bid for Japan’s 7-Eleven, a major convenience store chain that is somewhat similar to Couche-Tard and Circle K (except without the gas stations). Investors felt that Couche-Tard was offering too much for 7-Eleven — approximately $50 billion. This amount would have required Couche-Tard to take on an enormous amount of debt to close the deal, which would have been a departure from ATD’s usual approach to doing deals. So, ATD has taken a beating.
I’m going to be honest: I largely agree with the people who are saying that Couche-Tard is offering too high a price for 7-Eleven. It would definitely lever up the company’s balance sheet. However, I think that Japanese regulators will probably refuse to let the deal close. In light of this, I think ATD is a bargain at 19 times earnings.
Cenovus
Cenovus Energy (TSX:CVE) is a Canadian energy stock that trades at 11 times earnings. This is considerably cheaper than the average North American energy stock. Despite this, the company has been performing well in recent years. Over the last five years, the company has compounded its revenue at 23%, its earnings at 45%, and its free cash flow (FCF) at 14% annualized. The company is fairly profitable, with a 19% gross margin, a 5% net margin, a 7% FCF margin and a 9.5% return on equity. Finally, the company has a high dividend yield — approximately 4.3% at today’s price. Overall, this beaten-down stock looks like it has been beaten down too much.
Suncor
Suncor Energy (TSX:SU) is a Canadian integrated energy company whose shares are even cheaper than Cenovus’s. The company’s stock trades at 9.5 times earnings, 1.3 times sales and 1.4 times book at today’s price. It also sports a 4.5% dividend yield despite having a mere 29% payout ratio. This means that the company has plenty of room to raise its dividend, assuming that oil prices hold up reasonably well in the next few years. As for whether they will hold up well, that’s hard to say, but many investing experts like Warren Buffett are betting on a healthy long-term oil and gas market. So, there is potential here.
