Finding undervalued stocks to buy and hold over long periods of time is a game worth playing. Many long-term investors have found incredible returns by investing in value stocks, particularly when they trade near levels that don’t make much sense. And while valuations are broadly near all-time highs based on certain metrics, I’d still argue that there are plenty of such opportunities to be found in the market right now.
In terms of the companies I’m watching most closely right now, here are two top value picks I think have the potential to outperform in 2026 and beyond.
Air Canada
In the airlines sector, Air Canada (TSX:AC) is a company that has been very cheap, for a very long time. Outside of this stock’s surge heading into the pandemic to more than $50 per share, it has seen mostly muted upside over various market bottoms, but shares have continued to languish.
Now trading at less than $20 per share and a market capitalization of just $5.7 billion, Air Canada’s revenue, which is tracking to come in above $22 billion, means that this stock is trading at a price-sales multiple of around 0.25. That’s about as cheap as airlines come.
I can understand why there’s trepidation around Air Canada stock and this sector as a whole. Airfares have come down this past month, as high prices have dissuaded some travellers from paying up for their long-distance vacations. And with so much of Air Canada’s business coming from international travel (which is typically more profitable), that’s not a good trend.
But at just 8 times forward earnings (which prices in these effects, I’d argue), this airline may be worth considering as a way to play continued strength in consumer spending in 2026 and beyond.
Whitecap Resources
Another top Canadian stock I’d put in the undervalued bucket is mid-cap energy player Whitecap Resources (TSX:WCP).
Trading at less than 10 times forward earnings and providing investors with a 6.6% dividend yield, Whitecap’s status as a leading Canadian energy supplier puts this company squarely in the value category.
Now, I’ve actually highlighted this company as a growth pick, given Whitecap’s impressive ability to ramp up its production schedule and pull more barrels out of the ground in past quarters. Thus, despite the languishing price of crude, Whitecap has been able to see notable share price growth this year.
Given the company’s capital appreciation upside, in combination with this juicy dividend yield, I think investors could easily pick up double-digit annual returns in the next five years, even holding oil prices steady. On the other hand, if we see hotter inflation than expected or a return of geopolitical turmoil, this is a stock that could have much more upside than that.
