2 Canadian Stocks That Still Look Cheap After the Market Rally

After a rally, “cheap” can mean misunderstood – and these two TSX names are being priced on very different worries.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 7, 3:45 pm EDT

| More on: BTC2HUTLIF

Key Points

Hut 8 jumped on a huge long-term AI data-centre lease, but it’s still a high-risk execution story with messy earnings.
Labrador Iron Ore Royalty offers simpler cash flow and a solid yield, yet payouts can fall if IOC operations or iron prices weaken.
One is a transformation bet on contracted AI infrastructure, the other is an income play tied to iron ore cycles.

Market rallies can make everything look expensive, but not every stock moves the same way. The best “cheap after a rally” ideas often sit in areas investors still misunderstand or punish too harshly. They may have commodity exposure, temporary earnings pressure, or a business model in transition. That can create opportunity for patient investors.

Data Center Engineer Using Laptop Computer crypto mining — Source: Getty Images

HUT

Hut 8 (TSX:HUT) just jumped about 35% on the TSX after the company announced a massive new artificial intelligence (AI) data-centre lease. This is no longer just a Bitcoin-mining story. Hut stock now wants investors to see it as an energy infrastructure platform built around power, digital infrastructure, and compute.

The spark came from Hut 8’s Beacon Point project in Texas. Hut signed a 15-year lease covering 352 megawatts (MW) of IT capacity, with a base-term contract value at US$9.8 billion. If the tenant uses all renewal options, the value could rise to US$25.1 billion. Hut stock said the deal lifts its total contracted AI data-centre capacity to 597 MW, with an aggregate base-term contract value of about US$16.8 billion. This update also builds on the River Bend project in Louisiana, where Hut stock recently closed US$3.25 billion of investment-grade senior secured notes. In short, Hut stock found a way to fund a huge project without simply dumping the burden onto existing shareholders.

The earnings picture still looks messy, which keeps the risk high. Hut stock reported first-quarter 2026 revenue of about US$71 million, up 225% from the year before, while its quarterly loss narrowed to US$0.26 per share. AI and cloud compute revenue drove most of the growth, rising 309% to about US$66 million. So, does Hut stock still look cheap after a 35% jump? Not in the traditional sense. Yet the stock may be reflecting growth early, if Hut 8 turns these AI leases into long-term contracted cash flow.

LIF

Labrador Iron Ore Royalty (TSX:LIF), meanwhile, gives investors exposure to iron ore without running a mine directly. It owns a royalty interest and equity stake tied to Iron Ore Company of Canada (IOC), which produces high-grade iron ore concentrate and pellets in Labrador City. That makes LIF a simple business on the surface. It collects royalty revenue, receives IOC dividends when available, and passes much of that cash to shareholders.

Recent news has not looked perfect. In the first quarter of 2026, LIF dealt with lower concentrate and pellet sales volumes, weaker IOC profitability, and operational issues tied to haul truck availability and pellet plant reliability. Still, iron ore prices showed some resilience, with the 65% iron index averaging US$121 per tonne in the quarter, up 3% from the same period in 2025. Royalty revenue came in at $35.4 million, almost flat from $35.6 million a year earlier. Net income per share fell 36% to $0.21, while adjusted cash flow per share held steady at $0.31.

The valuation also keeps the stock interesting. LIF recently traded near 19 times earnings with a dividend yield a 4.9% and a trailing payout that reflects its cash-flow-heavy model. It’s not a traditional growth stock, and investors should expect dividends to move with iron ore prices and IOC performance. Yet LIF remains debt-free, had positive working capital of $27 million at quarter-end, and offers exposure to high-grade iron ore, which could matter if steel demand improves.

Bottom line

LIF offers income, iron ore exposure, and a simple royalty model at a still-reasonable price. Hut stock offers a riskier but potentially larger AI-infrastructure reset. One is built around cash flow, while the other is built around transformation. Yet both are still look worth watching after the rally, as long as investors understand the very different risks.