There are numerous reasons why I think Canadian stocks are worth a look for most investors. For those outside of Canada, the relative lack of coverage that many of the top blue chip names in the TSX receive means that there is plenty of potential for value creation for those looking for relative bargains in an otherwise overvalued market.
In my opinion, there are dozens of such undervalued and overlooked TSX stocks to choose from. Here are two of my top picks right now, and why I think these top options are worth buying before we turn the page on 2025.
Restaurant brands
One of my top picks in the TSX right now, and for the past few years for that matter, has been Restaurant brands (TSX:QSR).
The current market dynamics we see playing out are actually the main driver for this view. Restaurant Brands’ core business model revolves around managing its franchises and company-owned fast food franchises located throughout North America and the world. Given the current backdrop of consumer depreciation in nearly every industry and product category, I believe the company’s value-oriented offering should differentiate itself and drive continued growth even as we head into a market downturn.
The other important factor I think is worth considering is that QSR stock hasn’t been this cheap in a long time. Trading at just 24 times trailing earnings, and now with a dividend yield of 3.7%, there’s a lot to be said about Restaurant Brands’ long-term growth potential, in both bull market cycles and bearish periods.
Fortis
Another world-class Canadian stock I keep harping on is the utility giant Fortis (TSX:FTS).
Fortis has again shown strong growth during this recent cycle, driven by outsized expectations for electricity consumption over time. Given the rise of AI, machine learning and other energy-intensive technologies, investors are now placing a premium on the companies that deliver this power to these important customers.
For those who believe that electricity prices are likely to rise alongside margins, Fortis is a great way to benefit from these trends. I think these strong future earnings will likely also fuel dividend growth, a key driver of this stock’s performance over time. That’s because Fortis hasn’t missed an opportunity to increase its dividend in a given year for more than fifty years. Fortis’s management team would be reluctant to forego a dividend increase in the future, and will have no reason to do so if the company’s balance sheet strengthens over time, as I expect.
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