For Canadian investors looking for a bit more of a value tilt in the new year, it’s worth checking out the slate of names with valuation metrics that are still on the low end of the historical range. Of course, it’s harder to go for the stocks that are severely lacking in momentum. However, as the market waters get rougher, it’s these less-appreciated, low-multiple stocks that might be able to move forward, even if the tides move against them.
In any case, the TSX Index has a good chance at making new all-time highs again after a strong Thursday. And while your portfolio of individual names might be trailing the red-hot market average, I do think that chasing “what’s worked” might not be the best move, especially if it entails paying a big, fat premium on stocks that are arguably expensive and at greater risk of a more severe pullback once the next market-wide correction rolls around.
Either way, investors should pay careful attention to the longer-term roadmap as well as the price of admission, and perhaps less to the near-term momentum, which could go in either direction as the TSX Index’s climb becomes somewhat flatter after a year that saw stocks gain close to 30%. If you’re thinking caution and defence over aggression and chasing momentum, you might be on the right track.
Here are two easy stocks that I think stand out for value hunters looking to rotate to relative safety or, at the very least, lower volatility.
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goeasy
Shares of goeasy (TSX: GSY) had a tough past year, with shares sinking more than 21% over the timespan. Undoubtedly, a CEO change to end the year may not be what investors had on their wishlists. Either way, the stock has a small amount of newfound momentum behind it, now up 10% in the past month after a painful 45% drop from peak to trough.
While shares of the alternative lender remain more volatile than the market, I do think that the valuation is starting to get enticing, especially when you consider the potential for robust growth over the next three years. At 9.9 times trailing price-to-earnings (P/E), goeasy stock stands out as one of those deep-value names that’s worth braving on weakness, even though upside catalysts may be out of sight this January.
With tough earnings reports in the rearview and a short report that’s probably already priced in, it might be time to start nibbling. Though, do be cautious as shares of the $2.1 billion lender could go in either direction over the near term. And it’s unclear as to whether the new CEO can act as a catalyst for the year. We’ll just have to wait and see. With a nice 4.4% yield, though, there’s ample reward to be had for those comfortable with the risks.
Cenovus Energy
Cenovus Energy (TSX: CVE) stock also looks like a great deal to start off 2026. The stock yields a nice 3.6%, but has dealt with tremendous volatility in the past four years. Undoubtedly, the latest plunge is courtesy of the U.S.-Venezuela situation, which has left Canadian energy stocks in a rough spot.
Though the plunge may be overdone, I do think the implications for Canadian crude could get worse over the longer term. As such, I’d be a small nibbling on dips rather than a big buyer. The 13.1 times trailing P/E is enticing, especially as the firm ramps up production without maintaining cost discipline.
All considered, you’re paying a modest multiple for a well-run operator in an uncertain environment. If you lack energy exposure, perhaps the name could be worth keeping tabs on through 2026.
