The market’s more obvious winners (think the big Canadian bank stocks) may still be worth sticking with as they enter the new year with big momentum. That said, I think 2026 could be the year when the market strength starts to broaden out beyond the leaders, providing some of the lesser-known, overlooked bargain stocks a bit more of a lift. And though there might be more volatility and risk with some of the forgotten Canadian names out there, I think they’re worth standing by, especially given the attractive relative valuations that new investors can get as markets run a bit hotter this January.
While bargain hunting or bottom-fishing for value might not yield huge gains over the near term, I view them as intriguing bets for long-term value investors willing to hold for at least five years. So, if you’re looking for deals and are willing to look past the high-momentum heroes of the TSX Index, the following pair looks tempting right here.
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Sun Life Financial
Sun Life Financial (TSX:SLF) stock certainly didn’t have the best year, especially considering the hot run that other financials have been on in 2015. Despite the relatively flat year and increased turbulence, I continue to find the insurer a great place to be, especially if you’re looking for a lower-cost catch-up trade. The stock trades at a 16.6 times trailing price-to-earnings (P/E) multiple, with a nice 4.2% dividend yield.
With some analysts recently getting more bullish on the name, perhaps it’s time to give the relatively lukewarm name the benefit of the doubt, especially as management looks to take steps to power earnings growth moving forward. Undoubtedly, whether we’re talking about an Asian expansion or moves to enhance the U.S. business, which faced notable headwinds of late, I think shares of SLF might have a brighter 2026, with a nice dividend hike and perhaps a swift leg higher with or without continued momentum in the financials.
In short, Sun Life had a relatively modest 2025, but the stage seems set for better results moving forward as earnings growth looks to power higher while the U.S. business looks to bounce back a bit. Combined with a 0.81 beta, SLF stock may very well be a name that’s a less choppy ride, at least compared to the TSX Index.
Canadian Tire
Canadian Tire (TSX:CTC.A) stock is another compelling value play that still has a yield north of 4% (4.11% right now). The retailer goes for 12.5 times trailing P/E and could be a way to play a resilient middle-income Canadian consumer going into 2026. The stock has been picking up speed in the past month, now up close to 8% from its lows in December 2025.
With Hudson’s Bay-branded merchandise hitting stores and a slew of intriguing discretionary goods that consumers might have more budget for, I like the Canadian icon’s prospects, especially as sales growth shows signs of subtle strength. Add potential margin gains into the equation as the retailer invests opportunistically in its stores, and I like the risk/reward scenario from here.
How far could newfound momentum take the shares? Let’s just say I wouldn’t be surprised if $200 per share is in the cards.
