Ranking the Top 3 Canadian Recovery Stocks to Buy Now

Here are three of the best Canadian stocks to buy now and how they compare to each other when considering their recovery potential.

| More on:
calculate and analyze stock

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Over the last year, there’s no question that some of the best Canadian stocks to buy have been recovery stocks.

For the most part, these were fairly straightforward investments. First, investors would find companies that have been impacted by the pandemic and trading undervalued as a result. Then, they would buy and hold the companies until they recovered to fair value.

For most companies that weren’t impacted too badly, this worked. However, for other companies like, Cineplex for example, that have been impacted quite significantly, it’s been a different story.

Today though, as Canada continues to reopen its economy, it’s the last chance to buy high-quality Canadian recovery stocks while they trade cheap.

So here are the top three stocks to consider.

The most popular Canadian recovery stock

Coming in at number three on the list is a favourite among investors the last year, Air Canada (TSX:AC).

Air Canada hasn’t been worth an investment for a while, and it was actually a stock I was warning investors to avoid. However, now that we have made some great progress on the vaccination front, it may finally be time that Air Canada can recover.

The stock comes in at number three, though, because it still has some significant risks. There are always the risks of more shutdowns, especially as the virus continues to mutate.

Furthermore, there is an inherent risk with uncertainty, which there still is much of, especially considering the potential for different travel restrictions in every country.

Not only is Air Canada risky, but it also doesn’t have as much recovery potential as many investors might think, considering it’s lost so much money over the last year and a half.

So while this now looks like the time to take a position in Air Canada, the risk to reward doesn’t look as favourable as these next two stocks.

A top Canadian media stock

At number two is the high-quality Canadian cash cow Corus Entertainment (TSX:CJR.B). Corus is a media company owning T.V. and radio assets.

It’s a business that’s been in turnaround mode for years. And even though it weathered the pandemic well, Corus still has a considerable amount of value to recover.

In the past, the company had a high debt load that scared off many investors. However, the company has worked hard to improve its financial position and has managed to pay down over $350 million in debt or more than 20% of its debt load in the last two years.

Plus, it managed to do that while keeping the dividend flat and managing its operations through the pandemic.

So today, the company looks to be in a much better financial position, and even its operations look to be firing on all cylinders.

That’s why, with the stock trading at a forward price to earnings ratio of just 6.9 times, it’s one of the cheapest stocks in Canada and the second-best recovery stock to buy today.

The best Canadian recovery stock to buy now

Corus’s 6.9 times forward price to earnings ratio is extremely cheap, so you know that the top stock on this list must have even more potential for recovery.

And that’s exactly what Boston Pizza Royalties (TSX:BPF.UN) is offering investors. Boston Pizza is the top Canadian recovery stock to buy now, as it’s on the verge of a rapid recovery.

For most businesses, even with an uptick in sales after the pandemic, higher costs could shrink margins and weigh on profitability for a while.

Because Boston Pizza is a royalty fund that collects its royalty on the top line (revenue) numbers of the restaurants across Canada, it only needs to see higher sales for its income to begin to rise.

And with Canada continuing to progress well and restaurants slowly opening back up again, the sales Boston Pizza restaurants are doing should increase drastically over the next few months.

So while the stock trades cheap and offers a dividend yield of more than 5.4% today, it’s easily the best Canadian recovery stock to buy today.

And as its income increases rapidly while restaurants start to make more sales, I’d expect that in addition to rapid share price gains, the dividend should also rise rapidly, increasing the yield investors are earning on their investment.

Should you invest $1,000 in Brookfield Renewable Partners right now?

Before you buy stock in Brookfield Renewable Partners, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Brookfield Renewable Partners wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Stocks for Beginners

ETF stands for Exchange Traded Fund
Dividend Stocks

The Best Canadian ETFs $1,000 Can Buy on the TSX Today

If you're looking for ETFs that can turn $1,000 into strong cash flow, then these are the ones I'd go…

Read more »

dividend growth for passive income
Dividend Stocks

4 Canadian Dividend Stocks to Buy and Hold for the Next 20 Years

These dividend stocks can certainly stand the test of time, and have already done so for many investors.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

1 Practically Perfect Canadian Stock at All-Time Highs to Buy Now and Hold for a Lifetime

This top Canadian stock owns many of the brands Canadians use every day, checking all the essential boxes.

Read more »

analyze data
Stocks for Beginners

The Best Canadian Stocks to Buy Right Away With $30,000

These three top Canadian stocks have one thing in common: stability. Let's get into why.

Read more »

Stocks for Beginners

1 Magnificent Canadian Stock Down 37% to Buy and Hold Forever

The Canadian stock we're discussing may not seem essential, but parents would argue otherwise.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Almost Constant Monthly Income

These four choices could make any $14,000 investment a strong one, especially with solid dividends that will stand the test…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »

A airplane sits on a runway.
Stocks for Beginners

Where Will Bombardier Stock Be in 5 Years?

Bombardier stock has made such an amazing turnaround that it has investors wondering: what's next?

Read more »