In this article, we will look at the 10 Most Oversold Canadian Stocks to Invest In.
Canadian stocks have been on a roll, rallying to record highs and outperforming their US counterparts. The country’s main stock index, the Toronto Stock Exchange Composite Index, gained 29% in 2025, outpacing the S&P 500, which rose 16%. The outperformance has continued, with the TSX gaining 8% compared to the S&P 500’s 4% over the same period.
The stock market has delivered three consecutive years of gains. The outperformance stems from the Canadian equity market’s heavy concentration in energy and basic materials stocks, which have benefited from a spike in commodity prices.
“The materials sector benefited from rising prices in gold, copper, and other critical minerals, as investors sought hedges against geopolitical and inflation risks,” says Ashish Dewan, investment strategist at Vanguard Canada. Analysts expect this trend to continue into 2026.
Canada’s stock market looks set to keep rising. Contributing factors include low interest rates, strong consumer spending, and the possible resolution of the tariff conflict with the US.
“While no market leads forever, the Canadian stock market enters 2026 with meaningful tailwinds and a more balanced foundation than the US … the case for continued relative strength is very much alive,” says Desjardins Capital Markets macro strategist Tiago Figueiredo.
While valuations have risen significantly as the broader equity market powers to record highs, there is still room for further gains, especially in stocks that have come under pressure. Some Canadian stocks have pulled back sharply and entered oversold territory amid a decline in commodity prices.
“The strongest tailwind for Canadian equities is that they are part of value-oriented global equities. Canada’s stock market should benefit as artificial intelligence adoption broadens. Efficiency will improve across industries as AI is adopted by more consumers, not just technology builders,” says Ashish Dewan, investment strategist at Vanguard Canada.
With that in mind, let’s take a look at the most oversold Canadian stocks to invest in.
Our Methodology
For our list of the most oversold mid-cap stocks to buy, we selected Canadian stocks with the lowest Relative Strength Index (RSI) readings and an average analyst rating of Buy or better. We used the Finviz screener to identify stocks with an RSI below 35. We further trimmed the list to stocks with upside potential of more than 5% and detailed the number of hedge funds holding stakes in them in Q4 2025. Finally, we ranked the stocks based on their upside potential (as of May 4).
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Most Oversold Canadian Stocks to Invest In
10. Allied Gold Corporation (NYSE:AAUC)
Relative Strength Index Reading: 22.27
Stock Upside Potential: 10.46%
Number of Hedge Fund Holders: 11
Allied Gold Corp (NYSE: AAUC) is one of the most Oversold Canadian stocks to invest in. On April 1, Allied Gold Corp (NYSE: AAUC) shareholders approved a proposed acquisition of the company by Zijin Gold.
The Hong Kong listed company has agreed to acquire Allied Gold in a transaction that values the company at C$44 a share. The all-cash transaction values the company at an equity value of C$5.5 billion and comes with no financing conditions. Zijin is to acquire the company using cash on hand, with the transaction poised to close by the end of May.
According to Chairman and Chief Executive Peter Marrone, the transaction will provide a highly attractive all-cash offer for the company. It also represents an all-time high for the share price. The planned acquisition comes when Allied Gold Corp’s core asset, including Sadiola, the Côte d’Ivoire complex, and Kurmuk are poised to begin production this year. The mines produce about 375,000 ounces of gold a year.
Allied Gold Corporation (NYSE:AAUC) is an international gold mining company focused on exploring, developing, and operating gold mining assets in Africa, specifically in Mali, Côte d’Ivoire, and Ethiopia. Headquartered in Toronto, Canada, the company operates high-quality mines like Sadiola (Mali) and the CDI complex (Côte d’Ivoire) using open-pit and underground techniques, with a goal to become a senior producer aiming for over 700-800koz of annual gold production.
9. CGI Inc. (NYSE:GIB)
Relative Strength Index Reading: 33.56
Stock Upside Potential: 25.88%
Number of Hedge Fund Holders: 22
CGI Inc. (NYSE:GIB) is one of the most oversold Canadian stocks to invest in. On April 30, CGI Inc. (NYSE:GIB) inked a strategic partnership with Cleura to expand its sovereign cloud offering in the Nordics. The partnership comes as the company looks to capitalize on growing cloud demand from Nordic organizations.
As part of the partnership, CGI is to integrate Cleura’s European-based cloud services into its offerings. The integration will allow the company to further strengthen its position as a trusted partner in cloud data and hybrid IT. It will also allow the company to support clients as they navigate the complex digital landscape.
On the other hand, CGI has achieved the Microsoft Copilot specialization in Modern Work within its Microsoft AI Cloud Partner Program. The designation paves the way for the company to deliver Microsoft 365 Copilot solutions and its capabilities. The designation will allow the company to operationalize cloud and AI investments securely at scale while navigating cybersecurity challenges.
CGI Inc. (NYSE:GIB) is one of the world’s largest independent IT and business consulting firms, providing end-to-end services including strategic IT consulting, systems integration, and managed services. It helps clients—particularly in government, financial services, and healthcare—digitally transform, improve operational efficiency, and implement technology solutions.
8. Lululemon Athletica Inc. (NASDAQ:LULU)
Relative Strength Index Reading: 29.39
Stock Upside Potential: 33.61%
Number of Hedge Fund Holders: 78
Lululemon Athletica Inc. (NASDAQ:LULU) is one of the most oversold Canadian stocks to invest in. On April 29, Lululemon Athletica Inc. (NASDAQ:LULU) founder Chip Wilson reiterated his opposition to the appointment of former Nike executive Heidi O’Neill as the company’s next chief executive officer.
According to the founder, who owns 8.6% of the company, the board lacks the skillset to hire a world-class brand and product person who can deliver on current brands. Wilson also insists the next CEO should be in a position to lead the company in attracting talent and executing a turnaround. Elliott Investments, which owns a significant stake in Lululemon Athletica, had proposed former Ralph Lauren executive Jane Nielsen as the company’s next CEO.
On the other hand, Baird analyst has reiterated a Neutral rating on the stock and a $190 price target in response to the appointment of O’Neill as the next CEO, effective September 8. According to the analysts, the roughly four-month gap before O’Neil takes over may keep key strategic and governance questions open.
Lululemon Athletica Inc. (NASDAQ:LULU) is a multinational retailer. It designs and sells technical athletic apparel, footwear, and accessories. The company began with women’s yoga wear but has grown into a global lifestyle brand. Now it serves men and youth involved in running, training, and golf.
7. Franco-Nevada Corporation (NYSE:FNV)
Relative Strength Index Reading: 31.70
Stock Upside Potential: 35.83%
Number of Hedge Fund Holders: 41
Franco-Nevada Corporation (NYSE:FNV) is one of the most oversold Canadian stocks to invest in. On April 29, Canaccord analyst Carey MacRury upgraded Franco-Nevada Corp (NYSE: FNV) to a Buy from a Hold rating. The upgrade comes amid expectations that the company is positioned to benefit from higher gold prices.
The research firm expects gold prices to average $4,758 per ounce in 2026, up from its previous guidance of $4,401. Some of the factors Canaccord expects to drive higher gold prices include supportive central bank policies and unresolved global trade issues. Geopolitical tensions, driven by the escalation of war in the Middle East, are also expected to fuel demand for the precious metal.
Canaccord does not see any clear end in sight to the Iran conflict, which supports the case for higher gold prices. In addition, gold is expected to benefit from central banks’ monetary policy. The research firm expects Franco-Nevada Corp. and other gold producers to deliver improving margins and profitability as capital spending remains low.
Franco-Nevada Corporation (NYSE:FNV) is the leading gold-focused royalty and streaming company. It manages the largest and most diversified portfolio of cash-flow producing assets in mining and energy. The company does not operate mines, develop projects, or conduct exploration. Instead, it provides financing to mining companies in exchange for long-term rights to production.
6. Ero Copper Corp. (NYSE:ERO)
Relative Strength Index Reading: 32.68
Stock Upside Potential: 42.39%
Number of Hedge Fund Holders: 19
Ero Copper Corp (NYSE:ERO) is one of the most Oversold Canadian stocks to invest in. On May 4, Ero Copper Corp (NYSE:ERO) delivered solid first-quarter results attributed to solid operating performance across the company’s copper operations. The company also benefited from necessary ventilation circuits and cooling upgrades undertaken at the Xavantina operation.
Total copper production in the quarter totaled 17,287 tonnes at C1 cash of $2.39 per pound. Gold production totaled 5,495 ounces at an all-in-sustaining cost of $4,441. The company sold 10,330 ounces of gold. Net income in the quarter totaled $108.8 million, or $1.04 per share, while adjusted net income attributable to shareholders totaled $72.4 million, or $0.69 per diluted share.
Ero Copper Corp’s net debt shrank by $11 million to $490.7 million, resulting in a further reduction of the net leverage ratio to 1.0X. For the full year, the company is projecting copper production of between 67,500 and 77,500 tons. Total capital expenditure is expected to be between $275 and $320 million.
Ero Copper Corp. (NYSE:ERO) is a Vancouver-based mining company focused on producing copper, with gold and silver byproducts, primarily through operations in Brazil. Its key assets include the Caraíba operations (Bahia), the Tucumã operations (Para), and the Xavantina gold operation.
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