After a chaotic 2025 that saw plenty of uncertainty, rapidly rising base metals prices, lower interest rates, and stocks across several different industries seeing major rallies, it’s no secret that it’s not easy to find Canadian stocks you can buy that genuinely look cheap right now.
That’s why valuation matters more than ever, especially for investors willing to think long term. When markets are volatile, the best opportunities often show up in areas that have fallen out of favour, not because the business is broken, but because sentiment has shifted.
Real estate is a perfect example. Over the past couple of years, higher interest rates have crushed REIT valuations across the board, even though demand for housing hasn’t gone anywhere.
That disconnect between share prices and underlying fundamentals is exactly what long-term investors should pay attention to. It’s also why one of the best Canadian stocks that you can buy at such a dirt-cheap valuation today is Canadian Apartment Properties REIT (TSX: CAR.UN), the largest residential REIT in Canada.
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Why CAPREIT and its dirt-cheap valuation make it one of the best stocks to buy now
CAPREIT, as it’s known, has long been one of the best ways for investors to gain exposure to residential real estate in Canada. However, more recently, its share price has been under pressure, largely due to the same macroeconomic factors that have hit most real estate stocks.
REITs like CAPREIT employ tonnes of debt to fund the growth and expansion of the business. So, rising interest rates pushed borrowing costs higher, which weighed on its margins. At the same time, higher interest rates also reduced investor appetite for income stocks as bonds became more compelling, which led many investors to write off REITs altogether.
However, despite the short-term impacts to CAPREIT’s margins and share price, the stock still owns a massive portfolio of residential rental properties across Canada, and those properties continue to see strong demand.
Therefore, while you can gain exposure to one of the best and most diversified portfolios of residential real estate in Canada, at an unbelievably cheap valuation that it hasn’t traded at in over a decade, it’s unquestionably one of the best stocks you can buy now.
How cheap is CAPREIT today?
Because CAPREIT is such a high-quality business to own for the long haul, and because it offers investors a low-risk way to gain exposure to the residential real estate market in Canada, it’s worth holding for years.
Why it’s one of the best stocks to buy right now, though, is all down to its dirt-cheap valuation. After a tough stretch the last few years, CAPREIT is now trading at a forward price-to-adjusted funds from operations (P/AFFO) ratio of just 16.5 times.
That’s unbelievably cheap for a residential real estate stock of CAPREIT’s quality. Furthermore, it’s well below CAPREIT’s 5 and 10-year average forward P/AFFO ratios of 22.7 and 23.5 times, respectively.
In fact, aside from the last few weeks when CAPREIT was slightly cheaper, this is the cheapest the stock has traded in over a decade.
Furthermore, while the stock has 5 and 10-year average forward dividend yields of 3.1% and 3.2%, respectively, today, with the stock trading dirt-cheap, that yield sits at more than 3.9%.
So, if you’ve got $1,000 or any cash you’re looking to put to work in a high-quality, dividend-paying stock, CAPREIT is not just an excellent long-term investment; it’s one of the few high-quality Canadian stocks that you can buy dirt-cheap in this environment.
