You don’t always need to wait for a market crash to find stocks trading below their fair value. Sometimes, the opportunity lies in plain sight, hidden in falling charts or misunderstood earnings reports. In 2025, despite the TSX Composite hitting new peaks, there are still a few fundamentally strong companies flying under the radar. Their current share prices don’t quite reflect their long-term growth potential. And for patient investors, that could be an opportunity.
In this article, I’ll highlight two undervalued TSX stocks that I believe look attractive to buy with $3,000 today and hold for the long term.
West Fraser Timber stock
First up is West Fraser Timber (TSX:WFG), a Canadian wood products giant that’s currently trading well below its potential, in my opinion. It’s one of North America’s largest wood products companies, producing several products, including lumber, plywood, pulp, and paper across its 50-plus facilities in Canada, the U.S., and Europe.
Despite the broader market rally, its stock has seen a 33% downside correction so far in 2025 and currently trades at $86.58 per share. As a result, it now has a market cap of about $6.8 billion and offers a 2.1% annualized dividend yield.
Weak housing demand and new tariffs on Canadian lumber have affected its financial growth in recent quarters, which could be the main reason why its share prices have dived. In the third quarter of 2025, the company reported sales of US$1.3 billion and a net loss of US$204 million. The slowdown in U.S. housing starts and elevated mortgage rates squeezed pricing across lumber and oriented strand board (OSB), two of its core segments.
As near-term demand for its products remains muted, West Fraser plans to reduce the upper end of its 2025 lumber shipment target and is trimming costs while preserving flexibility.
Despite these temporary challenges, falling interest rates in the U.S. are already improving housing affordability, which may revive demand for lumber and OSB. Meanwhile, the company also expects stable growth in the use of mass timber for industrial and commercial buildings.
With its strong balance sheet, diversified production, and measured capital spending plan, West Fraser has the potential to recover sharply once housing activity stabilizes. That’s why the current weakness in WFG stock could be an attractive entry point for long-term investors.
Air Canada stock
The next name on the list, Air Canada (TSX:AC), comes from a very different sector, but its undervaluation story is similar. With 18% year-to-date losses, AC stock currently trades at $18.12 per share, valuing the company at around $5.4 billion.
Air Canada’s recent results suggest that the airline is operating far better than its valuation reflects. In the second quarter, the company reported a 2% year-over-year increase in its revenue to $5.63 billion. During the quarter, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also reached $909 million, representing a healthy 16.1% margin. Despite a small increase in revenue, strong demand for premium travel, cargo, and vacation services supported the airline company’s earnings in the latest quarter.
Interestingly, Air Canada expects to generate $30 billion in annual revenue and achieve an adjusted EBITDA margin of 17% or higher by 2028. It’s also targeting a free cash flow margin of around 5%, signalling the potential for robust long-term profitability.
In recent years, the Canadian flag carrier’s growth strategy has centred on diversifying its earnings beyond passenger fares. Strong performance from Air Canada Cargo, Aeroplan, and Air Canada Vacations has helped cushion the impact of volatile fuel costs and global travel uncertainties.
As air travel continues to recover amid declining interest rates and improved consumer spending, Air Canada’s current valuation could look like a bargain a few years down the road.
