There happen to be a myriad of reasons why I think Canadian stocks are worth a look for most investors. For those outside of Canada, the relative lack of coverage many of the top blue-chip names in the TSX receive means there’s plenty of potential for value capture for those seeking relative bargains in an otherwise overvalued market.
In my opinion, there are dozens of such undervalued and overlooked TSX stocks to choose from. Here are two of my top picks right now, and why I think these top options are worth buying before we turn the page on 2025.
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Restaurant Brands
One of my top picks in the TSX right now, and for the past few years, for that matter, has been Restaurant Brands (TSX:QSR).
The current market dynamics we’re seeing play out are really the key driver of this view. Indeed, Restaurant Brands’s core business model revolves around managing its franchised and company-owned fast-food franchises, spread across North America and the world. Given the current backdrop of consumers trading down in nearly every sector and product category, I think the company’s value-focused offerings should stand out and drive continued growth, even if we are headed for a market drawdown.
The other key factor I think is worth considering is that QSR stock hasn’t been this cheap in a long time. Trading at just 24-times trailing earnings, and now sporting a dividend yield pushing 3.7%, there’s a lot to like about Restaurant Brands’s long-term growth potential in bull market cycles as well as bearish periods.
Fortis
Another world-class Canadian stock I continue to pound the table on is utilities giant Fortis (TSX:FTS).
Fortis has continued to see strong growth during this recent cycle, driven by outsized expectations of electricity usage over time. Given the rise of AI, machine learning, and other energy-intensive technologies, investors are now putting a premium on the companies providing this power to these key customers.
For those who believe electricity prices are likely to rise alongside margins, Fortis is a great way to benefit from these trends. I think these strong future earnings are likely to also drive dividend growth, a key driver of this stock’s performance over time. That’s because Fortis hasn’t missed a chance to raise its dividend in a given year for more than five decades. Fortis’s management team would be loath to forego hiking its dividend in the future, and won’t have a reason to if the company’s balance sheet strengthens over time, as I expect it will.
