For investors looking to beat the market, finding top-quality, undervalued stocks is the name of the game. Of course, every investor has their own metrics and key factors they’re going to focus on. But generally speaking, finding companies that are both cheap relative to their sector as well as their historical levels is a great place to start.
In this piece, I’m going to highlight two top Canadian stocks I think investors should certainly consider right now. Both companies are trading at valuations I’d consider dirt cheap.
For those looking at energy stocks in particular, these are two names I think have plenty of upside moving forward. Let’s dive in!
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Suncor
In the Western Canadian energy patch, there are few companies better positioned to dominate this space than Suncor (TSX: SU).
This leading oil and gas producer has seen solid growth over the long term, with a very modest breakeven price per barrel which makes Suncor stock attractive for investors looking for long-term exposure to this sector. Over various cycles, the price of oil (and gas for that matter) can fluctuate a great deal. Thus, investors looking for stability will want to invest in companies like Suncor that have the economies of scale and safe haven balance sheets such companies display right now.
Over the long term, I expect Suncor to continue to deliver double digit total returns to investors (which is certainly supported by the company’s 4.3% dividend yield). So, for those willing to put some capital away for years (or decades), this is a top stock I think is worth considering right now.
Whitecap Resources
Another top Canadian energy stock I’ve been pounding the table on recently is Whitecap Resources (TSX: WCP).
Shares of the 7%-yielding energy company have been on a tear of late, with investors looking for above-market yields seeming to take an interest in this smaller oil and gas producer.
As I’ve pointed out in recent pieces, Whitecap’s dividend isn’t only meaningful at current levels — this company pays a monthly dividend. That means that investors looking to generate reliable and consistent passive income in retirement have a great option to choose from, and one that’s priced at an incredibly low seven times earnings.
Indeed, they don’t make stocks this cheap these days. Whitecap’s strong underlying balance sheet and impressive leverage to what could be another bull market in energy around the corner make this a more speculative play, but it’s one I think investors looking for growth may want to consider right now.
