The S&P/TSX Composite Index has shown remarkable resilience in 2026. While eight of 11 primary sectors have been positive so far, the impact of the unpredictable market varies per company. Some high-quality names trade below their intrinsic values, or even at steep discounts.
Value investors can capitalize on the situation by buying top-tier assets at a bargain. Three Canadian stocks, in particular, experienced sharp price declines but could deliver enormous gains from the impending rebound. You can capture the upside if you take positions in these undervalued stocks now.
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Industrial
Stella-Jones (TSX:SJ) closed at a high of $99.83 on February 10, 2026, but lost steam in succeeding weeks. At $71.28 per share, the industrial stock is down 16% year to date. The modest 1.9% dividend somehow compensates for the temporary weakness. Nonetheless, SJ carries a buy recommendation. Market analysts’ 12-month average price target is $94.44 (+32.5% potential upside.
The $3.9 billion company manufactures pressure-treated wood products used as residential lumber, utility poles, and railway ties. Its customer base includes the major electrical utility companies, commercial railroad operators, and residential builders.
Its President and CEO, Eric Vachon, maintains a positive outlook despite the 35.5% year-over-year decline in Q1 2026 net income to $60 million. “We are pleased with the strong performance of Utility Products, driven by sustained demand for wood utility poles.” He added that the $646 million liquidity at the quarter’s end supports future growth.
Retail
Kits Eyecare (TSX:KITS) operates in the specialty retail industry. The $397.7 million company sells contact lenses, eyeglasses, and sunglasses, and maintains a vertically integrated eyecare platform. Analysts also recommend a buy rating, forecasting a 91.7% jump to $22.43. KITS currently trades at $11.70 per share (-36% year-to-date).
The bullish sentiment stems from record Q1 2026 results. In the three months ending March 31, 2026, revenue increased 23.3% year-over-year to a record $57.5 million. Net income rose 23.2% to $2 million versus Q1 2025. Glasses revenue topped $10.8 million for the quarter, also a new record.
According to Roger Hardy, co-founder and CEO of KITS, the glasses category was a standout in the first quarter. He added that the durability of the contact lens platform will drive sustained profitable growth across the business. The 14 consecutive quarters of positive Adjusted EBITDA also indicate robust profitability metrics.
Technology
CGI Inc. (TSX:GIB.A) is a large-cap tech stock. The $19.6 billion information technology and business consulting services company serve clients in nearly all sectors globally. CGI.A’s year-to-date loss is 26% despite the strong results in the first half of fiscal 2026.
In Q1 fiscal 2026, total revenue reached $4.2 billion. Its President and CEO, François Boulanger, said, “Even in the context of today’s dynamic business environment, this performance reflects the resilience of our business model.”
The stock’s newest growth catalyst is the global collaboration with Microsoft. CGI announced achieving the Microsoft Copilot specialization in Modern Work within the Microsoft AI Cloud Partner Program. The IT and consulting firm will deliver AI-powered outcomes within the Microsoft AI ecosystem.
If you invest today, the share price is $93.35. Analysts’ 12-month average price target is $122.15 (+31%). CGI.A pays a modest but safe 0.73% dividend.
Fundamental strength
Stella-Jones, Kits Eyecare, and CGI Inc. maintain fundamental strength in their respective businesses. Expect the share prices to seek their true values once market conditions return to normal.
