These Canadian stocks are currently among the best in the world

Finding undervalued stocks to buy and hold for extended periods of time is a game worth playing. Many long-term investors have achieved incredible returns by investing in value stocks, especially when they trade near levels that don’t make much sense. And while valuations are largely near record highs by some metrics, I’d still argue that there are plenty of such opportunities in the market right now.

In terms of the companies I’m most watching right now, here are two top value picks that I think have the potential to outperform in 2026 and beyond.

Air Canada

In the aviation sector Air Canada (TSX:AC) is a company that has been very cheap for a long time. Aside from this stock’s surge heading into the pandemic to over $50 per share, the stock has seen mostly moderate gains off several market bottoms, but shares have continued to languish.

Air Canada’s revenue, now trading at less than $20 per share and a market cap of just $5.7 billion, means this stock, expected to top $22 billion, is trading at a price-to-sales multiple of around 0.25. That’s about as cheap as airlines come.

I can understand why there is fear around Air Canada stock and this sector as a whole. Airfares have fallen in the past month as high prices have deterred some travelers from paying for their long-haul vacations. And since much of Air Canada’s business comes from international travel (which tends to be more profitable), that’s not a good trend.

But at only eight times earnings going forward (with these effects factored in, I would argue), this airline could be worth considering as a way to sustainably strengthen consumer spending in 2026 and beyond.

Whitecap Resources

Another top Canadian stock I would put in the undervalued category is a mid-cap energy player Whitecap Resources (TSX:WCP).

Whitecap’s status as a leading Canadian energy supplier, trading at less than ten times forward earnings and offering investors a 6.6% dividend yield, puts this company firmly in the value category.

Now, I’ve actually pegged this company as a growth pick, given Whitecap’s impressive ability to ramp up its production schedule and get more barrels out of the ground in recent quarters. So, despite the shrinking price of crude oil, Whitecap has seen remarkable share price growth this year.

Given the company’s positive capital growth, coupled with this juicy dividend yield, I think investors can easily earn double-digit annual returns over the next five years, even if oil prices remain stable. On the other hand, if we see higher-than-expected inflation or a return of geopolitical unrest, this is a stock that could have much more upside potential than that.