The past couple of weeks have been encouraging for Canadian equity markets, supported by ongoing peace talks between the United States and Iran. The S&P/TSX Composite Index has rebounded sharply, rising about 9.02% from last month’s lows and now trading roughly 1.7% below its all-time high.
Despite this broader market recovery, the following two Canadian stocks continue to trade at meaningful discounts to their recent highs. Given their strong underlying businesses, solid growth outlook, and attractive valuations, these companies appear to present compelling buying opportunities at current levels.
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Dollarama
Dollarama (TSX: DOL) has come under pressure following mixed fourth-quarter results last month. The discount retailer reported revenue of $2.1 billion, up 11.7% year over year, supported by same-store sales growth of 1.5%, the addition of 75 net new stores in Canada over the past four quarters, and contributions from its 402 Australian stores acquired in July. However, same-store sales fell short of analysts’ expectations of 2.6%.
Adjusted earnings per share came in at $1.43, slightly ahead of the $1.41 consensus estimate and up 2.1% year over year. Despite this earnings beat, softer sales growth and cautious guidance weighed on investor sentiment.
Looking ahead, management expects to return to its historical pace of opening 60–70 stores this fiscal year after an above-average expansion in fiscal 2026. It also projects same-store sales growth of 3–4%, which is slightly below analysts’ expectations. Capital expenditures could rise significantly to $420–$470 million from last year’s $252.6 million, largely due to investments in a new logistics hub in Western Canada. Following these updates, the stock has declined more than 18.8% from its 52-week high.
Despite near-term challenges, Dollarama’s long-term outlook remains strong. The company plans to expand its Canadian store network to 2,200 locations and grow its Australian footprint to 700 stores by 2034. Additionally, its investment in Dollarcity could drive further growth, with the store count projected to increase from 712 to 1,050 by 2031.
With a resilient business model, steady demand for value offerings, and strong expansion plans, Dollarama appears well-positioned for long-term growth, making the recent pullback an attractive buying opportunity.
Waste Connections
Another Canadian stock trading at appealing valuations is Waste Connections (TSX: WCN), a provider of non-hazardous solid waste collection, transfer, and disposal services. The stock has faced pressure in recent months due to weaker recycled commodity prices, reduced landfill gas renewable energy credits, softer waste volumes, and delays in reopening its Chiquita Canyon landfill. Consequently, shares have fallen around 22.8% from their 52-week high, bringing the valuation down to more reasonable levels, with a forward price-to-earnings multiple of 27.9.
Despite these near-term headwinds, WCN’s long-term growth outlook remains solid. The company continues to expand through a mix of organic initiatives and strategic acquisitions. After commissioning five renewable natural gas (RNG) facilities, it is further growing its renewable energy portfolio, with additional projects expected to come online by the end of this year.
Supported by a strong balance sheet and robust cash flows, WCN plans to maintain an active acquisition strategy. Management has indicated a healthy pipeline of private deals that could collectively contribute around $5 billion in annualized revenue.
In addition, the company is investing in technology to enhance operational efficiency and productivity. Improvements in employee engagement and safety could also lower turnover and strengthen customer retention.
Considering its resilient business model, growth initiatives, and recent share price decline, WCN appears to offer an attractive buying opportunity at current levels.
