Got $1,000? 3 Undervalued Canadian Stocks to Buy Under $30

Given their attractive growth prospects and valuations, these four Canadian stocks provide excellent buying opportunities.

| More on:

The S&P/TSX Composite Index is trading closer to its all-time highs amid the expectation of strong corporate earnings and optimism over the reopening of economies worldwide. However, despite the substantial increase, these three Canadian stocks are trading at a significant discount from their recent highs and offer attractive buying opportunities.

Suncor Energy

Amid rising demand and supply concerns as OPEC+ countries have failed to reach consensus on production hikes, oil prices have reached $75/barrel, benefiting oil-producing companies, such as Suncor Energy (TSX:SU)(NYSE:SU). Given its low-decline, long-life assets and integrated business model, the company is well positioned to benefit from higher oil prices.

The production growth, higher refinery utilization, and declining operating expenses could also boost the company’s financials in the coming quarter. Meanwhile, Suncor Energy has also planned to invest $5 billion through 2025 to optimize its integrated value chain, sustain its base business, and grow its low-carbon businesses. These investments could deliver incremental free fund flows of $2 billion from 2025. So, the company’s growth prospects look healthy.

Despite its healthy growth prospects, the company still trades over 33% lower from its January 2020 levels. So, I believe investors should utilize this correction to accumulate the stock to earn superior returns.

Algonquin Power & Utilities

Supported by its strong performance, Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has delivered above 145% returns over the last five years at a CAGR of 19.8%. However, this year, the company is under pressure due to the weakness in the renewable energy space. Currently, it trades 10.7% lower. So, I believe investors should utilize this correction to accumulate the stock.

The world is quickly shifting towards renewable energy to meet its energy requirements amid rising pollution levels. So, this transition could benefit Algonquin Power & Utilities, which has over 30% of its business involved in power production from renewable sources. The company has planned to invest around $9.4 billion over the next five years, expanding its utility and renewable assets. So, along with these investments, a favourable environment could boost its financials in the coming years.

Further, Algonquin Power & Utilities has rewarded its shareholders by increasing its dividend at a CAGR of above 10% in the last 11 consecutive years. Currently, the company pays a quarterly dividend of $0.2094 per share, with its forward dividend yield standing at 4.48%. So, I believe Algonquin Power & Utilities is an excellent buy right now.

Air Canada

The pandemic had severely dented the passenger airline industry, as travel restrictions had forced passenger airline companies to ground their aircraft. Even Canada’s largest airline company, Air Canada (TSX:AC), has felt the impact, with its stock trading around 48% lower than its January 2020 levels.

Meanwhile, amid the easing of travel restrictions, the company has planned to resume its operations from August 1 on 17 routes and 11 destinations worldwide. With the expansion of vaccination, the company could soon resume its operations to other destinations also, boosting its financials in the later quarters.

Air Canada is planning to expand its cargo business by adding two retired passenger aircraft to its fleet by the end of this year. Further, the company plans to add more aircraft next year, as the demand for cargo services is rising amid the thriving e-commerce business. Meanwhile, the company’s financial position looks healthy amid $5.9 billion financial support from the Canadian government. So, the company is well equipped to ride out this volatility while delivering superior returns.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Energy Stocks

Oil industry worker works in oilfield
Energy Stocks

Is Suncor Stock a Buy, Sell, or Hold for 2025?

Suncor stock looks undervalued as the company continues to increases cash flows, earnings, and shareholder returns.

Read more »

construction workers talk on the job site
Energy Stocks

Best Stock to Buy Right Now: Baytex vs Suncor?

Suncor and Baytex stocks both look like solid companies offering growth and dividends. But which is the better buy?

Read more »

bulb idea thinking
Energy Stocks

3 Incredibly Cheap Energy Stocks to Buy Now

Energy stocks are trending upwards on the back of several key factors. And these three continue to be top cheap…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Should You Buy Freehold Royalties Stock for its 8% Yield?

Freehold Royalties is a TSX dividend stock that offers shareholders a forward yield of 8%. But is the energy stock…

Read more »

Muscles Drawn On Black board
Energy Stocks

Is Suncor Energy Stock a Good Buy?

Suncor is on a roll in 2024. Are more gains on the way?

Read more »

profit rises over time
Top TSX Stocks

3 Reasons to Buy Enbridge Like There’s No Tomorrow

Have you considered buying Enbridge (TSX:ENB)? Here are 3 reasons to buy Enbridge today for lasting growth and income.

Read more »

oil pump jack under night sky
Energy Stocks

Is CNQ Stock a Buy for its 4.5% Dividend Yield?

CNQ stock is one of the best options out there for dividend growth. But what about value? Let's take a…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Imperial Oil Stock a Buy, Sell, or Hold for 2025?

Imperial Oil stock is in a precarious position, so what should investors consider as we head nearer to 2025?

Read more »