2 Cheap Canadian Stocks That Are No-Brainer Buys

If you’ve got cash and you’re looking to buy the dip, here are two of the best Canadian stocks to buy while they are unbelievably cheap.

| More on:
sale discount best price

Image source: Getty Images

As central banks continue to increase interest rates and stocks sell off, there’s no shortage of high-quality Canadian stocks that are extremely cheap. Unfortunately, in many cases, investors don’t realize what a significant opportunity these pullbacks are until years later after the market has recovered.

The main reason why investors don’t take full advantage of these situations and pull the trigger in these environments, though, is due to too much concentration on the short term and fear that the market environment could worsen before it gets better.

However, if you’re looking for quality stocks that you plan to hold for the long haul, how these stocks perform in the short term doesn’t necessarily matter. And when trying to buy these stocks at the lowest price, the very bottom is extremely challenging to predict.

So as long as you believe the stock is high quality and the price today offers compelling value, then you should look to buy these Canadian stocks now.

The two topflight Canadian stocks listed below have now become so cheap that they are easily some of the best to buy today.

A high-quality defensive growth stock to buy on the dip

Many defensive growth stocks have been some of the most resilient stocks you can buy. But while GFL Environmental (TSX:GFL)(NYSE:GFL) is also a defensive stock, because it’s also a rapid growth stock, it’s lost some significant value.

This makes the massive environmental services company one of the more enticing stocks you can buy now. Its core operations, such as non-hazardous waste management, are highly defensive, and it continues to grow by acquisition, building out its footprint and finding synergies.

In fact, GFL is now the fourth largest environmental services company in North America and continues to have significant growth potential both organically and by acquisition.

Furthermore, its defensive operations give GFL significant pricing power. This means it can pass on increasing costs to its customers, another reason it’s one of the best Canadian stocks to buy while it’s cheap.

The stock’s earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to grow by more than 17% this year and over 13% next year. So the fact that it now trades at a forward enterprise value (EV)-to-EBITDA ratio of just 11.8 times makes it a compelling investment. Just a year ago, the stock was trading at a forward EV to EBITDA of 13 times. And keep in mind that this indicator of whether a firm is undervalued or overvalued is typically higher for high-growth industries.

So when you consider how reliable GFL is and its growth potential over the next few years, it’s not surprising to see that all six analysts that cover the stock rate it a buy. In addition, its average target price of $50 offers more than 30% upside, a significant value for such a defensive business.

So if you’re looking for cheap Canadian stocks to buy now, GFL is certainly one of the top values out there.

An unbelievably cheap Canadian stock

Another Canadian stock offering tonnes of growth potential at an incredibly cheap price is WELL Health Technologies (TSX:WELL).

WELL has been cheap for some time now, but in recent months, it’s continued to lose value and has become one of the cheapest stocks in Canada.

The healthcare tech stock has fallen completely out of favour now that the pandemic is in the rearview. Yet despite appetite from investors fading, WELL continues to perform exceptionally well, and the recent acquisitions it’s made have provided significant organic growth.

Encouragingly, management has reiterated its guidance higher on more than one occasion this year. So as the company continues to perform well and grow while its stock continues to decline, WELL is quickly becoming one of the best cheap Canadian stocks to buy.

Today, it trades at a forward EV-to-sales ratio of just 1.9 times. Meanwhile, since being upgraded to the TSX in January 2020, it’s had an average forward EV-to-sales ratio of 6.4 times.

So it’s no surprise that, just like GFL, all six analysts covering WELL have the stock rated a buy. However, the average analyst target price of $8.64 is more than a 160% premium from where it trades today.

So if you’re looking to buy the dip and find top Canadian stocks while they are cheap, WELL Health Technologies might be the deal you’re looking for.

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 positions in WELL Health Technologies Corp. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Top TSX Stocks

dividend growth for passive income
Top TSX Stocks

1 Magnificent Canadian Stock Down 9 Percent to Buy and Hold Forever

There are some really great stocks on the market for any portfolio, but this one magnificent Canadian stock screams buy.

Read more »

hand stacks coins
Dividend Stocks

The Smartest Dividend Stocks to Buy With $400 Right Now

The market is full of dividend stocks to buy. Here's a look at two options that cater to both growth…

Read more »

space ship model takes off
Top TSX Stocks

My 5 Favourite Stocks to Buy Right Now

There are plenty of great stocks on the market. Here's a look at my favourite stocks to own for growth…

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 »

bulb idea thinking
Dividend Stocks

Is Fortis Stock a Buy for Its 4% Dividend Yield?

Want a great long-term stock with defensive appeal and a tasty dividend yield? Fortis(TSX:FTS) has all that and more.

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Top TSX Stocks

Top Canadian Stocks to Buy Right Now With $7,000

Discover two shining stars among the top TSX stocks of 2024. Hammond Power Solutions (TSX:HPS.A) and one glittering gold stock…

Read more »

happy woman throws cash
Tech Stocks

2 Stocks That Have Created Millionaires, and May Continue to Do so

Unlock the secrets of millionaire-maker stocks and start building your fortune today. goeasy (TSX:GSY) and another TSX stock remain great…

Read more »

Tractor spraying a field of wheat
Top TSX Stocks

5 Top Stocks to Buy in October [PREMIUM PICKS]

Here are five hand-picked stocks the team at Motley Fool Canada thinks are particularly smart investments this month.

Read more »