Despite yesterday’s setback, the S&P/TSX Composite Index is up 13.9% for this year. Solid quarterly performances and expectations of rate cuts by the United States Federal Reserve have supported stock price growth. Amid the improvement in investors’ sentiments, let’s look at two Canadian value stocks that offer long-term buying opportunities for investors.
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Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is an oil and natural gas producer with a diversified asset portfolio across North America, the North Sea, and offshore Africa. Its large, low-risk, and high-value reserves, effective and efficient operation, and lower capital reinvestments have dragged its expenses and breakeven point down. Therefore, the company enjoys healthy profitability and cash flows, thereby allowing it to raise its dividends consistently. Over the last 25 years, the Calgary-based company has raised its dividend at an annualized rate of 21%, while its forward dividend yield currently stands at 5.46%.
Moreover, CNQ has significant oil and natural gas reserves, with a total proven reserve life index of around 32 years. These reserves mostly contain high-quality petroleum products. The company is also strengthening its production capabilities with planned capital investments of around $6 billion for this year. Amid population growth, rising income levels, and a delay in the adoption of electric vehicles, analysts are predicting oil demand to increase in the coming years. Meanwhile, the International Energy Agency projects oil demand to rise by 2.5 mb/d (million barrels per day) to 105.5 mb/d between 2024 and 2030. Rising oil demand could support oil prices, thereby benefiting CNQ.
Despite its healthy growth prospects, CNQ trades at an attractive NTM (next-12-month) price-to-earnings multiple of 12.6, making it an attractive buy.
goeasy
goeasy (TSX:GSY), which offers leasing and lending services primarily to subprime customers, is my second pick. Since beginning its consumer lending business in 2006, the company has expanded its loan portfolio to $5.1 billion by the end of the second quarter of fiscal 2025. This expansion has driven its financials, with its revenue and diluted earnings per share growing at an annualized rate of 22.7% and 23%, respectively, for the last five years. Amid these solid performances, the company has delivered an annualized return of 29.5% over the previous five years. Despite these solid returns, the company’s NTM price-to-earnings multiple stands at an attractive 10.3.
Moreover, goeasy continues to focus on new product launches, add new delivery channels, and make strategic initiatives, which could help in expanding its customer base and loan portfolio. Meanwhile, the company’s management projects its loan portfolio to reach $7.35-$7.75 billion by the end of 2027, with the midpoint representing a 48% increase from its current levels. The management also expects its top line to grow at an annualized rate of 11.4% through 2027, while delivering return on equity of over 23% annually. Further, the company has raised its dividend for 11 consecutive years at an annualized rate of 29.5%, while its forward dividend yield stands at 2.79%. Considering its growth prospects, consistent dividend growth, and cheaper valuation, I believe goeasy would be an excellent long-term buy at these levels.
