The 2 Best Canadian Stocks to Buy While They’re Still Cheap

Canadian stocks are soaring, but there are still deals to be had. These two top companies are trading at bargain prices today.

| More on:

Canadian investors have enjoyed a growth-filled year so far. The S&P/TSX Composite Index is up more than 15% year to date and more than 20% over the past 12 months. 

The growth over the past year has sent some stocks soaring into sky-high valuations. If you’re looking to own a top growth company on the TSX today, you’re likely going to need to pay a premium. I’m not necessarily saying it’s not worth it, but investors need to be wary of the risks of expensive valuations. 

Even though the market as a whole is up big this year, there are still deals to be had if you’re a long-term investor.

Here are two top Canadian companies that are at the top of my watch list today. They won’t cost you a fortune to buy today, either.

Canadian stock #1: Toronto-Dominion Bank

The major banks have been some of the most dependable Canadian stocks for decades. Whether you’re looking for growth, passive income, or dependability, the banks have you covered. The Big Five are all trading at very reasonable prices today, too. 

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is my top bank to buy today. The bank’s $150 billion market cap ranks it as one of the largest companies on the TSX and the second largest among the Big Five banks. 

It’s the bank’s broad offering to its shareholders that has it on my watch list. The Canadian stock has been a market beater for years, has a top dividend, and provides exposure to non-Canadian economies.

Shares of TD Bank are up a market-beating 55% over the past five years. That’s also not even including its impressive dividend. It’s yielding above 3.5% at today’s stock price, and the company has been paying a dividend to its shareholders for more than 150 years.

Where TD Bank separates itself from its peers for me is its exposure to the growing U.S. economy. About one-third of the bank’s net income comes from the United States. That provides Canadian shareholders with much-needed diversification away from the Canadian economy. 

Not only does it provide Canadians with diversification but growth too. TD Bank’s American operations still predominantly reside on the east coast, leaving plenty of room for growth in the coming years in the western states.

The bank stock may be trading at a near all-time high right now, but I’d say it’s still undervalued. It’s trading at a favourable forward price-to-earnings ratio of only 11 today.

Canadian stock #2: Brookfield Renewable Partners

The renewable energy space is one area of the market that I’d strongly suggest any long-term investor having exposure to. The market opportunity is only increasing for many leaders in the sector, and I don’t expect that trend to slow down anytime soon.

It hasn’t been the most rewarding year for green energy investors. While the market is nearing a 20% gain in 2021 alone, there are lots of top renewable energy stocks that are trading at a loss this year. 

If I were to recommend just one stock in the sector, it would be Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP). The $13 billion company is a market leader that offers its global customers a range of different renewable energy options.

Shares are up a market-crushing 125% over the past five years. Year to date, though, the stock is down 15% and is trading more than 20% below all-time highs.

The entire sector has taken a hit in 2021 after a strong performance in 2020. So, if you’re a long-term investor that’s willing to be patient, now is the time to be loading up on renewable energy stocks.

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 Nicholas Dobroruka owns shares of Brookfield Renewable Partners. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »