Even as fears grow over a stock market correction, a potentially inflating AI bubble (at least according to Sam Altman), and trade war risks, Canadian investors should set their sights on the longer-term picture. Indeed, September isn’t the easiest month to invest through, but postponing value buys or waiting for the seasonally questionable period to end, I think, isn’t the best move in the world. Indeed, if there’s value on your radar, you should be inclined to act, whether it’s the so-called September effect that’s in play, the January effect, or the Santa Claus rally.
Either way, smaller retail investors with less than $1,000 may wish to start nibbling here and now despite the growing list of risks and somewhat swollen broad market valuation multiples. As they say, the stock market is, in fact, a market of stocks. Overvalued names and bubbly plays can certainly co-exist with value plays, even deep-value plays in some of the more unloved corners of the market.
In this piece, we’ll explore unloved areas with a wonderful name that could make sense to buy for as little as $500 or even $200, provided you pay no commission with your brokerage.
If you must pay $10 or even $5 per trade, however, perhaps it’s best to buy $1,000 at a minimum to keep your trading fees minimal. Either way, with the advent of cheap and no-cost trading, the following value plays, I think, are worthy nibbles in late summer.
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CN Rail
It’s hard to remember the last time shares of CN Rail (TSX: CNR) were this out of favour. Indeed, just by looking at the chart, you’d think Canada is already in a recession. While an economic downturn is still very much possible, especially if tariffs take a turn for the worse, I think that CNR shares are already so oversold that investors are getting ample dividend growth and upside at a rock-bottom price of admission.
Indeed, CN Rail has an extensive railway network and an opportunity to go after bargains in the North American rail scene as mergers and acquisitions kick things up a notch going into the new year. Indeed, we’ve already heard about potential mergers in the rail scene. Personally, I think CN Rail is in the running to make a big deal south of the border, especially since the firm lost the bidding war for Kansas City Southern just a few years ago. With the rail industry in a funk, I’d argue that CN Rail could get a great deal in this tough climate.
With a strong balance sheet and more than enough room to grow the dividend (currently 2.75%, the highest it’s been in a long time), I’d look to back up the train while the stock goes for 17.7 times trailing price to earnings (P/E), a multiple that I think discounts the wide economic moat of the firm.
Going into 2026, I’d look for a management reshuffling to act as a sort of catalyst, as the firm looks for a turning point amid what can only be described as a tariff-plagued cloud of uncertainty. Tariffs and headwinds won’t last forever, though. And with a lower outlook and so much negative momentum, I view CNR stock as oversold (down over 28% from all-time highs) and overdue for a swift bounce.
