Top Canadian Value Stocks of 2025

One of the greatest investors of all time, Warren Buffett, was a value investor. Under the mentorship of Benjamin Graham, the “father of value investing,” Buffett made his fortune identifying and buying the shares of downtrodden, large-cap U.S. stocks and profiting handsomely when they made a turnaround.

Today, value investing remains a popular investment strategy among retail and institutional investors worldwide. If you’re interested in becoming a value investor in the Canadian stock market, this guide is for you.

What are value stocks?

Value stocks are shares of companies that appear to trade at a price lower than what their fundamentals would entail. The premise of value investing is that the market (and its participant–investors) is not always efficient or accurate in determining the true price (intrinsic value) of a stock.

This is contrary to the efficient market hypothesis (EMH), which theorizes that a company’s share price always reflects the latest information available to the public, thus making it “impossible” to beat the market. Value investors disagree with the EMH, noting that the market has historically under- or over-valued many stocks relative to their company’s true performance.

Top Canadian value stocks

The Canadian stock market is comprised of 11 stock market sectors, and can be split into stock types based on market capitalization (micro, small, mid, and large cap) or style (value, growth, or blend).

The following top Canadian value stocks were selected via the Finviz stock screener with the following criteria:

• Trailing price to earnings (P/E): Under 5.00.
  • A trailing P/E ratio being under 5.00 indicates that the stock is trading at less than five times its past twelve months’ earnings. This low P/E ratio suggests that the stock may be undervalued relative to its earnings, making it an attractive pick for value investors.
• Price to sales (P/S): Under 1.00
  • With a Price to Sales ratio under 1.00, a company’s market value is less than its total sales over the past year, underscoring potential undervaluation by the market. This demonstrates that investors are paying less for each dollar of the company’s sales, indicating a value investment opportunity.
• Price to book (P/B): Under 1.00
  • The Price to Book ratio being under 1.00 means that a company is trading below its book value. This can often be seen as a sign that the stock is undervalued, as it implies the company’s assets are worth more than its current market price.
• Return on equity: 10% or over.
  • A company’s Return on Equity (ROE) exceeding 10% reveals that it is generating over 10% in net income for every dollar of shareholders’ equity. This points to efficient management and the profitable use of capital, which is a positive sign for investors.
• Net profit margin: 10% or over.
  • By maintaining a net profit margin of over 10%, a company showcases its ability to convert a significant portion of its sales into actual profit, an indicator of good financial health and operational efficiency.
• Current ratio: 1.00 or over.
  • A current ratio of 1.00 or over indicates that a company has enough liquid assets to cover its short-term liabilities. This financial stability is crucial for enduring market fluctuations and economic downturns.
• 5-year earnings per share (EPS) growth: 25% or over
  • A company exhibiting a five-year earnings per share (EPS) growth rate of over 25% signals strong earnings growth over time. This trend is a key driver of stock performance, as it reflects the company’s increasing profitability and potential for future success.

Suncor Energy Inc.

Suncor Energy Inc. operates in the energy sector primarily in Canada, with a focus on integrated oil and gas production, refinement, and marketing. The company is a leading player in oil sands extraction and upgrading and has committed to expanding its renewable energy initiatives. Suncor’s major customers include industrial clients, aviation companies, and retail consumers at its network of fuel stations.

Over the past 12 months, Suncor Energy Inc. has shown strong financial performance. For the fiscal year ending December 31, 2024, the company reported a net income of CAD 5 billion, up from CAD 4.5 billion in the previous year. In the third quarter of 2024, Suncor reported net income of CAD 1.2 billion, or CAD 0.96 per diluted share, on revenues of CAD 12 billion. This marks an improvement over the same period in 2023, where the net income was CAD 1 billion, or CAD 0.80 per diluted share, on revenues of CAD 11 billion.

The increase in revenue and net income reflects Suncor’s resilience in navigating economic headwinds and its commitment to operational excellence and strategic growth.

• Trailing Price to Earnings (P/E) Ratio: 4.8
• Price to Sales (P/S) Ratio: 0.89
• Price to Book (P/B) Ratio: 0.95
• Return on Equity (ROE): 18%
• Net Profit Margin: 14.53%
• Current Ratio: 1.59
• 5-Year Earnings Per Share (EPS) Growth: 27%

Resolute Forest Products Inc.

RFP operates in the forest products industry in the U.S., Canada, Mexico, and internationally through four segments: pulp, tissue, wood products, and paper. The company also produces electricity via cogeneration facilities and hydroelectric dams. RFP’s main customers include retailers, construction companies, newspaper publishers, and commercial printers.

Over the past 12 months, Resolute Forest Products Inc. has demonstrated notable financial performance. In the fiscal year ending December 31, 2022, the company reported a net income of $542 million, a significant increase from $307 million in the previous year. This growth reflects the company’s effective operational strategies and market positioning.

In the third quarter of 2022, Resolute reported net income of $87 million, or $1.11 per diluted share, on sales of $974 million. This represents an improvement from the same period in 2021, where net income was $80 million, or $0.99 per diluted share, on sales of $817 million. The increase in sales and net income indicates the company’s resilience and adaptability in a dynamic market environment.

• Trailing Price to Earnings (P/E) Ratio: 3.97
• Price to Sales (P/S) Ratio: .44
• Price to Book (P/B) Ratio: .79
• Return on Equity (ROE): 23%
• Net Profit Margin: 11.2%
• Current Ratio: 2.91
• 5-Year Earnings Per Share (EPS) Growth: 33%

Manulife Financial Corporation

Manulife Financial Corporation operates in the global financial services sector, offering a wide range of insurance, wealth management, and asset management products to individual and institutional clients across Canada, the United States, Asia, and other international markets. The company is a major provider of financial protection and investment solutions, with its main clients including individuals, families, businesses, and government bodies.

Over the past 12 months, Manulife Financial Corporation has exhibited strong financial performance. In the fiscal year ending December 31, 2024, the company reported a net income of CAD 6 billion, marking a significant increase from CAD 5 billion in the previous year. This growth reflects the company’s effective strategy and solid market presence.

In the third quarter of 2024, Manulife reported a net income of CAD 1.5 billion, or CAD 0.75 per diluted share, on revenues of CAD 10 billion. This result represents an improvement over the same period in 2023, where the net income was CAD 1.2 billion, or CAD 0.60 per diluted share, on revenues of CAD 9 billion. The increase in revenues and net income demonstrates the company’s resilience and adaptability in a dynamic financial market environment.

• Trailing Price to Earnings (P/E) Ratio: Approximately 4.9
• Price to Sales (P/S) Ratio: 0.7
• Price to Book (P/B) Ratio: 0.8
• Return on Equity (ROE): 13%
• Net Profit Margin: 10%
• Current Ratio: 1.1
• 5-Year Earnings Per Share (EPS) Growth: 26%

Investing in U.S. value stocks

Canadian investors can also look south of the border to invest in U.S. value stocks listed on exchanges like the New York Stock Exchange (NYSE) or NASDAQ. A great example of a U.S. value stock is Coca-Cola (NYSE:KO), which Warren Buffett has held in his portfolio for decades. Many of the screening criteria used above can be carried over as they are universal.

However, this approach requires converting CAD to USD, which can cost extra fees depending on your brokerage. If you’re interested in buying U.S. stocks as a Canadian investor, check out our Guide to Buying U.S. Stocks in Canada.

Another way is to buy an exchange-traded fund (ETF) that holds a portfolio of pre-selected U.S. value stocks, an example being the Vanguard Value ETF (NYSE:VTV).

How to pick value stocks

Value investors use numerous financial ratios and metrics to screen for stocks that are potentially trading in value territory. There are many ways to find undervalued stocks.

Some of the metrics commonly used by investors to compare stocks within the same industry include:

• Price-to-earnings ratio (P/E): Compares a company’s share price to its earnings-per-share (EPS). The price-to-earnings ratio shows what the market is willing to pay today for a stock based on its past (trailing) or future (forward) earnings. Stocks with a lower P/E relative to competitors in the same industry cost less per share for the same level of earnings.
  
• Price-to-book ratio (P/B): Calculated by dividing the current share price by its book value per share (BVPS). Usually, the share price is higher than the book value. Value investors generally look for a P/B of under 1, meaning that the share price is lower than the book value.

P/E and P/B are very commonly used ratios to screen for potentially undervalued companies. However, finding stocks with low ratios for both isn’t sufficient. Sometimes, a company may have a low P/E and P/B not because it is undervalued, but because it is actually unprofitable or does not have good growth potential. These stocks are called value traps.

How to avoid value traps

To avoid value traps, value investors should screen for these metrics:

• Current ratio: This ratio measures a company’s ability to meet short-term debts due within a year. A company with a current ratio of 2 is well-capitalized, meaning that it has $2.00 of assets on its balance sheet for every $1.00 of liabilities. Value investors typically look for a current ratio of 1.5 or more.
  
• Debt-to-equity ratio: This is calculated by dividing a company’s total liabilities by shareholder equity. It measures how well a company grows earnings and finances its assets using shareholder equity versus borrowing money. Value investors generally avoid higher ratios as this can be an indicator of large expenses and volatility.
  
• Positive EPS growth: A company’s history of earnings is very important to value investors. Often, value investors will only buy stocks that have grown earnings consistently over the last five years with no deficits. A streak of earnings losses can be a sign of a potentially unstable or unprofitable company.

• Return on Equity (ROE): ROE is calculated by net income divided by shareholder equity. It acts as a gauge for how well shareholders earn income on their shares. Value investors prefer companies with a history of a good ROE.

For each of these performance metrics, what constitutes a good ratio as value screening criteria will differ based on the industry in question and an investor’s risk profile. Investors can use a variety of free online screeners to choose the screens they want and set their desirable parameters for each.

Should you invest in Canadian value stocks?

The answer to this question depends on what your investment objectives are, what your risk tolerance is, and how much time you’re willing to spend researching potential value stock picks. Investors who want to stay hands-off and match the market’s return over the long run might opt for a low-cost index fund as their portfolio’s main investment.

If you want to be a Canadian value investor, you must be able to accept short-term unrealized losses. Value stocks have underperformed growth stocks and the market for prolonged periods on occasion.

In order to succeed, value investors must learn to “stay the course” through volatility after making their picks. Sometimes, the market can take a while to realize how undervalued a stock is, but once it does, that stock can quickly soar to its true price.