As February was concluding, Reuters reported that Canada’s economy showed unexpected strength in Q4 2024, with an annualized growth rate of 2.6%. Household spending in particular, which makes up over half of the total GDP, rose by 1.4% in Q4. Business investments, which were stagnant for the past 11 quarters, finally showed positive momentum with a 0.7% growth in Q4. This was fueled by a 4.2% surge in investment in machinery and equipment. On a per capita basis, real GDP rose by 0.2% in Q4, which represents the second increase in the last 11 quarters. However, recently, amidst concerns over a US-led trade war, a Reuters poll from April indicates rising recession risks for Canada, which will potentially trigger at least two more Bank of Canada rate cuts this year, despite a temporary 90-day pause on some reciprocal tariffs announced by the US. Economists have now lowered Canada’s growth forecasts to 1.2% for this year and 1.1% for the next, down from 1.7% and 1.6% respectively. All the economists surveyed agree that the US tariffs have negatively affected business sentiment. Inflation is projected to average 2.4% in 2025 and 2.1% in 2026.

On April 7, Steve Odland, The Conference Board president and CEO, joined CNBC’s Special Report to talk about the impact of tariff-led uncertainty on CEO sentiments. Steve Odland emphasized that CEOs need clarity on numbers, costs, and the rules of the game to plan effectively. While CEOs felt somewhat positive about the general direction of the economy, the introduction of tariffs had thrown everything into confusion. Odland described the situation as chaotic because many had expected tariffs to target countries like China, not close allies such as Canada and Mexico. This move was a shock to the system and raised questions about whether the tariffs were a temporary negotiating tactic or a long-term policy change, which further complicates business planning.

In a conversation regarding the expectation of certain countries to come to the negotiating table, Odland responded that some countries, including Canada and Mexico, would likely be prioritized for quick resolution due to their importance. This is because of the integrated nature of the North American supply chain, especially in industries like automotive manufacturing. The conversation suggested that if firm deals could be reached with Canada, Mexico, China, Vietnam, and Taiwan, ideally resulting in zero tariffs, business confidence would improve.

That being acknowledged, we’re here with a list of the 10 most undervalued Canadian stocks to buy according to Wall Street analysts.

Our Methodology

We first used the Finviz stock screener to compile a list of cheap Canadian stocks that had a forward P/E ratio under 15. We then selected the 10 stocks with high upside potential of over 35%. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.

Note: All data was sourced on April 21.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Most Undervalued Canadian Stocks to Buy According to Wall Street Analysts

10. Magna International Inc. (NYSE:MGA)

Forward P/E Ratio as of April 21: 6.92

Number of Hedge Fund Holders: 16

Average Upside Potential as of April 21: 39.53%

Magna International Inc. (NYSE:MGA) manufactures and supplies vehicle engineering, contract, and automotive space. It operates through 4 segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. It offers battery enclosures, battery trays, fully assembled body-in-white modules, and chassis systems, among other products.

The company’s Complete Vehicles segment includes engineering and complete vehicle assembly. It presents a distinct business model with a different sales and margin profile compared to Magna’s automotive parts and systems segments. In 2024, while Magna’s overall sales were flat year-over-year, the Complete Vehicles segment experienced lower production volumes, notably with the end of production of certain programs and lower complete vehicle assembly volumes.

Magna International Inc. (NYSE:MGA) now anticipates lower sales in the Complete Vehicles segment from 2025 to 2026 due to decreased expected volumes on the BMW Z4 and Toyota Supra assembly programs, as well as the end of the Jaguar Land Rover assembly programs. The broader company strategy focuses on sales growth in its automotive parts and systems businesses, which expects a flat to positive 3% growth over the market (excluding complete vehicles) during the 2024-2026 period.

9. BRP Inc. (NASDAQ:DOOO)

Forward P/E Ratio as of April 21: 7.76

Number of Hedge Fund Holders: 8

Average Upside Potential as of April 21: 40.29%

BRP Inc. (NASDAQ:DOOO) designs, develops, manufactures, and sells powersports vehicles and marine products. The Powersports segment offers year-round products like all-terrain vehicles, seasonal products like snowmobiles, and OEM engines. The Marine segment includes boats, pontoons, outboard engines, and related PA&A, and other services.

In FQ4 2025, revenue from the company’s Year-Round Products was $1.1 billion, which was a decrease of 17% year-over-year. This was attributed to reduced shipments aimed at right-sizing the network inventory. Within the Year-Round Products category, Can-Am side-by-side vehicles experienced a retail decrease of about 10% in FQ4 due to the non-current unit dynamic, while the industry saw a low single-digit decline. Despite this, FY2025 was the second-best year ever for Can-Am side-by-side retail.

BRP Inc.’s (NASDAQ:DOOO) strategy is to double down on its Powersports leadership position and focus its efforts and investments on its core activities, such as Year-Round Products. The company’s innovation is showcased through the launch of the Can-Am electric motorcycle, which expanded its modular design with a new high-cc ATV platform.