3 Undervalued Canadian Stocks Set for a Bull Run

A bull outlined against a field
Image source: Getty Images.

Written by Amy Legate-Wolfe at The Motley Fool Canada

When it comes to finding undervalued Canadian stocks, what makes them undervalued in the first place? Is it just that shares are down? Or perhaps there’s growth coming? Or is it that their fundamentals show future value?

Today, we’re going to look at three stocks that offer all three. Undervalued Canadian stocks are set to soar in the near future, but with shares at a valuable price right now. So, let’s get right into it.

Air Canada

Air Canada (TSX:AC) stock remains an undervalued stock that’s gone through a heck of a time over the last few years. The company is finally set to see some normalcy after the pandemic. Yet it’s still struggling with plenty of debt on the books.

The key here is that Air Canada stock remains the largest Canadian airline. It’s now one of the most undervalued Canadian stocks, with a Relative Strength Index (RSI) at just 16.29 as of writing. What’s more, the company continues to invest in new fleets of aircraft that could certainly see major expansion in the years to come.

Add on that the company’s long-haul business, business air travel, and emerging low-cost carriers all have seen growth, and investors should certainly keep their eyes on this stock — especially as it trades down 11% in the last year, at just 11.9 times earnings.

Savaria

Another of the undervalued Canadian stocks to consider is Savaria (TSX:SIS). The stock has missed earnings after earnings, causing shares to fall further. And yet it remains an all-around buy by analysts. Why is that?

The key here is, again, the future. Savaria stock creates accessibility solutions for elderly and disabled individuals. These solutions are necessary now, but even more so in the next decade. As the baby boomers continue to age, these long-term care solutions will be absolutely essential — hence, the promise of a strong future.

Right now, however, Savaria stock trades at a 22.9 RSI, with shares down 10% in the last year. So, you can also grab onto a 4.14% dividend yield, which is higher than normal! That certainly makes it one of the top undervalued Canadian stocks worth considering.

Transcontinental

Finally, the last of the undervalued Canadian stocks to consider is Transcontinental (TSX:TCL.A). While this again is about the future, however, it’s a far nearer improvement that investors can expect. Transcontinental stock is in the packaging services, which saw a major boost in the pandemic. However, as consumers tightened their wallets, demand for packaging became less.

Even so, that demand is starting to see some stabilization. This could mean investors should see improvement in the stock — especially after beating earnings two quarters back and meeting them the next round. With more earnings on the way, investors could see Transcontinental stock bounce back quickly.

For now, it trades at a 23 RSI, 8.69 times earnings, shares are down 36%, and it offers an 8.53% dividend yield! That certainly gives you enough of a reason to pick up the stock now and hold onto it until the market recovers. After all, it will recover. So, make sure you’re prepared for when it does with these undervalued Canadian stocks.

The post 3 Undervalued Canadian Stocks Set for a Bull Run appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Air Canada?

Before you consider Air Canada, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023... and Air Canada wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 10/10/23

More reading

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Transcontinental. The Motley Fool has a disclosure policy.

2023