3 Undervalued Canadian Stocks to Buy Immediately

These three TSX stocks look overlooked because the market is focused on short-term noise, not long-term earnings power.

Key Points
  • Power Corp can trade at a discount because it’s a holding company, even as it grows book value and buys back shares.
  • Nutrien looks cheap when investors assume the fertilizer downturn is permanent, despite strong volumes and cycle recovery potential.
  • Couche-Tard can get undervalued simply because it’s “boring,” even while it keeps generating dependable cash flow.

A Canadian stock looks undervalued when the share price does not match what the business can reasonably earn over time. You usually see that gap when investors overreact to a short-term worry, like a weak quarter, a cycle trough, or a noisy headline. The best undervalued setups pair durable cash flow with a valuation that assumes little improvement. Then you only need the Canadian stock to execute normally for the market to re-rate it. So let’s look at three that fit the bill.

chart reflected in eyeglass lenses

Source: Getty Images

POW

Power Corporation of Canada (TSX: POW) can fall into the undervalued bucket as it is a holding company, and the market often discounts holding companies even when the underlying businesses perform well. It owns meaningful stakes in major financial businesses, including Great-West Lifeco and IGM Financial, so it benefits when insurance earnings stay steady and asset-management markets stabilize. It also tends to appeal to investors who like a mix of income and disciplined capital allocation.

Over the last year, the story has looked more like quiet compounding than fireworks. In its third quarter of 2025, it reported net earnings from continuing operations of $703 million, or $1.10 per share, and adjusted net earnings from continuing operations of $863 million, or $1.35 per share. It also reported book value per share of $36.74, up 8% year over year, and noted it had repurchased 7.4 million shares year to date at an average cost of $51.33. All while providing a 3.7% yield, trading at 14 times earnings.

NTR

Nutrien (TSX: NTR) looks undervalued when the market treats the fertilizer cycle like a permanent problem instead of a normal cycle. Nutrien owns a major potash business and a large retail network that sells crop inputs. That mix gives it exposure to both commodity pricing and steadier retail earnings. When fertilizer prices fall, investors often punish the Canadian stock hard, even though global food demand keeps pushing farmers to invest in yields over time.

The last year revolved around whether potash and nitrogen pricing can stabilize while volumes remain healthy. In its fourth quarter of 2025, Nutrien reported net earnings of $0.58 billion, or $1.18 per share, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.3 billion, with adjusted net earnings per share of $0.83. It also highlighted that potash adjusted EBITDA increased to $2.3 billion in 2025, helped by higher prices and record sales volumes. If the Canadian stock keeps costs down, it could be undervalued trading at 19.3 times earnings with a 3.1% dividend.

ATD

Alimentation Couche-Tard (TSX: ATD) can look undervalued when the market gets bored of consistent execution. It runs a massive convenience and fuel network and has a long track record of improving margins, buying back shares, and generating dependable free cash flow. It does not need a booming economy to work. People still buy coffee, snacks, and fuel, and that resilience can make it a steady compounder which sometimes trades at a discount when investors chase flashier stories.

Recent results showed it still knows how to deliver. In the second quarter of fiscal 2026, it posted net earnings attributable to shareholders of $740.6 million and diluted earnings per share (EPS) of $0.79, while adjusted net earnings were about $734 million and adjusted diluted EPS was $0.78. Furthermore, in its strategy update, it referenced fiscal 2025 adjusted EBITDA of US$6 billion, net earnings of US$2.6 billion, and free cash flow of US$1.8 billion, and set a fiscal 2026 free cash flow expectation in excess of US$2.5 billion. ATD stock trades at just 22.5 times earnings and offers a 1% dividend yield.

Bottom line

Not only could these three Canadian stocks be undervalued, they could provide ample income, even with just $7,000 in each.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
POW$65.54106$2.45$259.70Quarterly$6,947.24
NTR$97.2571$3.03$215.13Quarterly$6,904.75
ATD$84.2183$0.86$71.38Quarterly$6,989.43

The main risk is timing. Value can stay undervalued longer than you want, and cycles can stay unfriendly longer than expected. If you want to act without trying to nail the exact bottom, averaging in over a few purchases can be the calmer way to do it.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.

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