In an era of market froth and valuations near all‑time highs, it’s refreshing to find a couple of Canadian blue‑chip names that still look like they’re on sale. These aren’t speculative side bets; they’re cash‑flow‑rich, shareholder‑return‑oriented giants with the kind of balance‑sheet discipline and competitive positioning that make them ideal core holdings.
Source: Getty Images
Canadian National Railway
Canadian National Railway (TSX:CNR) is arguably one of the most undervalued blue‑chip stocks on the TSX right now. Trading below its historical average valuation, despite a best‑in‑class operating profile, CN Rail is a long-term holding I think investors may want to capitalize on right now.
Despite its recent stock price surge, CNR stock trades around 19 times forward earnings. That’s impressive, considering a surge of roughly 100% over the course of the past two years.
This operator of a 33,000‑km rail network that connects North American ports, industries, and shippers has been fundamentally strong of late. Indeed, as a gauge of North American growth, that’s a good thing for investors in this stock and the TSX overall.
Fundamentally, CNR’s appeal comes from its pricing power, volume resiliency, and relentless free‑cash‑flow generation. The company just delivered mid‑single‑digit adjusted earnings per share (EPS) growth and has maintained a very strong operating ratio. That’s even as near‑term trade and tariff uncertainty have weighed on sentiment. Management is also cutting 2026 capital spending from roughly $3.4 billion to $2.8 billion, which should accelerate free cash flow and support a continued march higher in dividends and buybacks. On this front, CN Rail has impressively raised its payout for 29 straight years.
For a long‑term, income‑plus‑growth investor, CNR stock offers a compelling mix of a low‑teen‑percent‑type yield on cost over time. Additionally, investors receive a durable moat over land‑based freight, and the optionality of a rebound in cross‑border trade once tariffs and policy noise clear. That combination of a discount valuation, fortress balance sheet, and long‑term cash‑flow runway is exactly the kind of setup that, in my view, makes CNR a “buy‑and‑never‑check‑the‑ticker” style holding.
Enbridge
Enbridge (TSX:ENB) is a midstream energy‑infrastructure giant that epitomizes the classic blue‑chip pipeline. This is a company with enormous scale, contract‑backed cash flows, and a dividend investors can count on for decades.
The stock trades at a forward price‑to‑earnings multiple of around 22-times. That’s still below many of its global peers, while the stock offers investors a dividend yield of 5.4%. Indeed, that’s an unusually attractive mix of yield and valuation compression for a company of this quality.
From a fundamentals standpoint, Enbridge is supported by a diversified portfolio of pipelines, gas utilities, and an expanding renewables platform. Roughly 20% of North America’s hydrocarbons move through its network. And those assets are underpinned by long‑term contracts that insulate cash flows from short‑term commodity swings.
At the same time, Enbridge’s management team has been proactive on the balance sheet. Targeting a lower debt‑to‑equity ratio and locking in hedges against rising interest‑rate exposure, these strategies should keep the cost of capital manageable as a multibillion‑dollar project backlog comes online.
For yield‑starved investors, Enbridge’s current valuation is what makes it stand out. The stock is trading below its own historical multiple even as distributable cash flow is projected to grow in the low‑ to mid‑single digits over the next few years. That’s an offering that suggests both income and slow, compounding capital appreciation.
In a portfolio, Enbridge fills the role of a low‑beta, cash‑flow‑anchored holding that should keep paying and growing its dividend through most economic and energy‑price cycles. Thus, I think Enbridge is a classic “buy when everybody hates it” stock to consider right now.
