The Canadian equity markets have witnessed a strong bounce-back from their March lows amid easing geopolitical tensions in the Middle East and the reopening of the Strait of Hormuz. However, the following three companies have failed to participate in the recovery rally for various reasons and currently trade at a considerable discount to their 52-week highs. Given their solid underlying businesses, excellent growth prospects, and discounted stock prices, these three undervalued Canadian stocks offer attractive buying opportunities.
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Dollarama
Dollarama (TSX: DOL) tops my list of Canadian stocks to buy right now, trading more than 11% below its 52-week high. Meanwhile, the company delivered an impressive first-quarter result for fiscal 2027 earlier this month, with revenue and earnings per share rising 21.4% and 13.3%, respectively, while same-store sales increased 3.5%. However, the acquisition of Australia’s lower-margin The Reject Shop business weighed on profitability, contributing to a 100-basis-point decline in EBITDA (earnings before interest, taxes, depreciation, and amortization) margin to 31.6%.
Looking ahead, Dollarama continues to invest heavily in expansion, targeting 2,200 stores in Canada and 700 stores in Australia by fiscal 2031. The company is also building a new distribution centre in Calgary, which could become operational by the end of next year. The new facility should improve supply chain efficiency and support growth across Western Canada.
Additionally, Dollarama stands to benefit from the expansion of Dollarcity, in which it owns a 60.1% stake, as the Latin American retailer plans to increase its store count from 752 to 1,050 by fiscal 2031. Supported by strong fundamentals, multiple growth drivers, and an attractive valuation, Dollarama appears well-positioned to deliver strong shareholder returns over the next several years.
Waste Connections
Waste Connections (TSX: WCN) is my second pick and currently trades more than 14% below its 52-week high. The stock has faced pressure in recent months due to several short-term headwinds, including weaker recycled commodity prices, softer waste volumes, lower contributions from renewable energy credits, and delays in reopening the Chiquita Canyon landfill.
Despite these near-term headwinds, Waste Connections continues to pursue growth through both organic investments and acquisitions. The company has already brought six renewable natural gas (RNG) facilities into service and is constructing another six, which could become operational by the end of this year. In addition, supported by strong cash flows and a healthy balance sheet, the company remains active on the acquisition front, with a pipeline of private businesses representing approximately $5 billion in annual revenue.
Given the essential nature of its services, resilient business model, and attractive long-term growth prospects, I believe the recent pullback in Waste Connections presents an excellent buying opportunity for long-term investors.
Northland Power
Northland Power (TSX: NPI) is my final pick. Although the renewable energy producer has delivered strong gains this year, with its share price rising 26.5%, the stock still trades roughly 14% below its 52-week high. It also appears reasonably valued, trading at a forward price-to-earnings multiple of 15.4.
Meanwhile, the global transition toward cleaner energy sources continues to create substantial long-term growth opportunities for the company. Northland Power plans to invest between $5.8 billion and $6.6 billion over the next five years to double its power-generating capacity to 7 gigawatts by the end of the decade. In addition, management is pursuing efficiency initiatives and cost-optimization measures expected to generate approximately $50 million in annualized savings beginning in 2028, thereby supporting stronger profitability.
The company also pays a monthly dividend of $0.06 per share, yielding 3.2% on a forward basis. Supported by its highly contracted business model, attractive growth outlook, and reasonable valuation, Northland Power appears to be an excellent long-term investment opportunity at current levels.
