2 Stocks to Buy at an 11-13% Discount in August

Now is the time to execute the buy-the-dip and sell-the-rally strategy on two Canadian stocks trading at a discount.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published August 19, 2025 8:30 pm EDT

The month of August started with some unpleasant news. First came the U.S. tariff shocks. Then came Canada’s job data, which showed that the employment rate had decreased by 0.2% to 60.7% in July 2025, giving the Bank of Canada a strong reason to cut interest rates in September. Lastly, tariff impact was visible in the second-quarter earnings of most companies, sending their stock price down sharply. This has created an opportunity to buy some Canadian stocks at an 11-13% discount in August.

top TSX stocks to buy — Source: Getty Images

Stocks that are trading at a discount in August

Canadian Tire

Canadian Tire (TSX: CTC.A) stock slipped 13.7% on August 7 and 8 in response to the second-quarter earnings. It reported a 6.4% year-on-year surge in comparable sales driven by growth across discretionary, essential, seasonal, and non-seasonal products. Its loyalty sales outpaced non-loyalty sales as data-driven customer engagement helped Canadian Tire get targeted discretionary spending from customers. The retailer also saw patriotic purchasing driving traffic and basket size.

If sales are good, why did the stock fall? The answer lies in profitability.

Canadian Tire is investing in its True North strategy, wherein it will enhance stores and upgrade technology to improve the in-store and digital experience. It is also strengthening its owned brand portfolio; it acquired intellectual property rights of Hudson’s Bay Company for about $30 million and sold Helly Hansen.

The above operational capital expenditure is expected to dampen Canadian Tire’s profitability until 2026, said chief financial officer Darren Myers, at the second-quarter earnings call. This was visible in the second quarter as its earnings per share (EPS) decreased by 4% year on year to $3.57.

The second quarter is strong for discretionary spending. The next quarter could see a higher mix of low-margin essentials. Seasonality, transformative growth, and weaker EPS guidance in the short term pulled the stock down 13.7% immediately after the earnings release.

Canadian Tire stock reached the oversold category as its Relative Strength Index (RSI) fell to 30. The RSI measures the magnitude of recent price changes to determine if the stock is overbought or oversold. An RSI of 30 or below shows the stock is oversold. Now is a good time to buy when others are selling. Its EPS will rise when the transformative growth strategy starts delivering outcomes, thereby driving the stock price.

Constellation Software stock

Constellation Software (TSX: CSU) stock fell 11.35% between August 11 and 14 after the second-quarter earnings. The company saw its net income reduce 68% year-on-year to US$56 million, even though revenue increased by 15% to US$2.84 billion. The dip in net income was due to foreign exchange loss of US$118 million.

The company reports its earnings in U.S. dollars but earns in different currencies. The tariff war made the U.S. dollar volatile, resulting in foreign exchange losses. This has nothing to do with the company’s regular operations. It made acquisitions worth US$380 million, and increased cash flow from operations by 63% year over year.

The 11% dip in stock price is an overreaction. The stock’s RSI is 32.8 at the time of writing, bringing it into the oversold category. Now is a good time to buy this resilient growth stock at the dip. The acquisitions could add value in the future and drive Constellation’s share price above $5,000.

A tip for smart investing

The share price momentum is volatile around events, such as earnings and new product launches. An investor should look at the outcome of these events from a long-term perspective. If the earnings are influenced by short-term factors but the long-term growth is intact, the earnings dip presents a buying opportunity to long-term investors.