Finding Value in Canadian Stocks After 2024's Big Rally

Finding Value in Canadian Stocks After 2024’s Big Rally

Do you want value? These top Canadian stocks have offered it time and again but now look better than ever.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 26, 2025 8:45 pm EDT

The year 2024 was a remarkable period for the Canadian stock market. The TSX surged by approximately 17%, delivering total returns of around 21% when including dividends. This impressive rally left many investors wondering where to find value in a market that seemed to have priced in much of its growth potential. However, even after such a robust performance, opportunities still exist for discerning investors seeking value in Canadian stocks with strong market capitalizations.

Canadian dollars in a magnifying glass — Source: Getty Images

TD stock

One notable example is Toronto-Dominion Bank (TSX:TD). Despite facing challenges, including an anti-money laundering case affecting its U.S. growth, TD Bank’s fundamentals remain solid. As of writing, the bank’s stock is trading at $79 per share, with a price-to-earnings (P/E) ratio of 10.1. This is more than 10% below its long-term average.

This suggests that the Canadian stock is undervalued, offering potential for future price appreciation. Furthermore, TD’s dividend yield stands at an impressive 5.3%, well above its historical average of around 4% over the past decade, making it an attractive option for income-focused investors.

Granite REIT

Another compelling opportunity is Granite Real Estate Investment Trust (TSX:GRT.UN). Granite REIT is a high-quality industrial real estate investment trust (REIT) with a diversified portfolio of 138 income-producing properties and five development sites.

The Canadian stock recently experienced a meaningful pullback, dipping more than 13% from its 2024 peak of $80 per unit. At its current price of $69, analysts believe Granite is trading at a near 22% discount to its fair value, presenting strong upside potential in the near term. The Canadian stock has maintained a sustainable payout ratio of 62% of its funds from operations, making its 4.9% yield not only attractive but also secure.

Then there’s tech

In the technology sector, OpenText (TSX:OTEX) also presents a potential value opportunity. In 2024, OpenText saw a 28% decline in its stock value, currently trading at $39.50 per share with a market cap of $10.5 billion. Despite this downturn, the Canadian stock’s strong position in the information management sector and its ongoing investments in cloud-based solutions suggest the potential for a rebound.

Lightspeed Commerce (TSX:LSPD) is exploring strategic options, including a potential sale. The Canadian stock’s recent challenges have led to a significant decrease in its stock price, especially after the recent announcement that 2025 revenue guidance is down. However, it could also potentially present a value opportunity for investors willing to accept higher risk in exchange for the possibility of substantial returns.

Foolish takeaway

It’s important to note that while the 2024 rally has elevated many stock prices, pockets of value remain. Investors should conduct thorough research, considering both company-specific factors and broader economic indicators, to identify Canadian stocks that offer genuine value. Focusing on companies with strong fundamentals, attractive dividends, and the potential for future growth can help investors navigate the post-rally landscape effectively.

So, while the Canadian stock market’s significant rally in 2024 has made value investing more challenging, opportunities still exist. Canadian stocks like Toronto-Dominion Bank, Granite REIT, and OpenText offer solid fundamentals and attractive valuations. However, investors should remain vigilant, conducting comprehensive analyses and considering their risk tolerance before making investment decisions.