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.

8. Rogers Communications Inc. (NYSE:RCI)

Forward P/E Ratio as of April 21: 7.47

Number of Hedge Fund Holders: 17

Average Upside Potential as of April 21: 45.62%

Rogers Communications Inc. (NYSE:RCI) is a communications and media company. It operates through three segments: Wireless, Cable, and Media. It offers a range of products and services, such as mobile Internet access, wireless voice & enhanced voice, device financing, IoT solutions, internet & WiFi services, security, and even on-demand television.

In 2024, Rogers attracted more subscribers than any of its competitors and added a combined 623,000 wireless and Internet net additions. Specifically within Wireless, the company added 512,000 net postpaid and prepaid phone subscribers throughout the year and led the Canadian wireless sector for the third consecutive year.

In Q4 2024, Wireless service revenue increased by 2% year-over-year. Rogers Communications Inc. (NYSE:RCI) added 95,000 net postpaid and prepaid phone subscribers in Q4. While this was down year-on-year due to a smaller market size resulting from government policies, the majority of these new subscribers were on Rogers’ premium 5G brand. The 2025 outlook reflects overall single-digit growth for total service revenue.

7. Gildan Activewear Inc. (NYSE:GIL)

Forward P/E Ratio as of April 21: 11.64

Number of Hedge Fund Holders: 25

Average Upside Potential as of April 21: 48.75%

Gildan Activewear Inc. (NYSE:GIL) manufactures and sells various apparel products. It provides various activewear products, such as T-shirts, fleece tops & bottoms, sports shirts, polos, and tank tops. Some of its brands include Gildan, Gildan Performance, Gildan Hammer, Gildan Softstyle, Comfort Colors, American Apparel, and Champion.

In Q4 2024, net sales in the company’s Activewear segment rose by 11% year-over-year, which was fueled by higher sales volumes across various channels and product lines. Gildan is capturing the market due to strong consumer response to product innovations like the soft cotton technology. For the full year 2024, if the impact of the Under Armour phase-out is excluded from the Hosiery and Underwear category, the Activewear segment’s growth aligns with the mid-single-digit increase observed in that category.

The expansion of Gildan Activewear Inc.’s (NYSE:GIL) Champion brand through distributors in the printwear channel is also expected to contribute to market share gains in 2025. Moreover, Gildan is benefiting from a changing competitive landscape with some players exiting the market. The company’s international Activewear business has seen a substantial 20% increase in sales in the last two quarters.

6. Bausch + Lomb Corp. (NYSE:BLCO)

Forward P/E Ratio as of April 21: 13.26

Number of Hedge Fund Holders: 34

Average Upside Potential as of April 21: 49.25%

Bausch + Lomb Corp. (NYSE:BLCO) is an eye health company that operates in three segments: Vision Care, Pharmaceuticals, and Surgical. It sells its products and services through direct sales forces and independent distributors.

During Q4 2024, Bausch + Lomb’s Vision Care segment achieved a notable revenue of $723 million, which marked an 11% increase year-over-year. Examining the entire FY2024, the Vision Care segment delivered $2.739 billion in revenue, which showed a 10% growth on an annual basis. This is a result of the contributions from both its consumer and contact lens businesses. The consumer eye care business experienced a healthy 10% revenue increase in Q4.

This growth is driven by the LUMIFY redness reliever, which saw a 24% growth, and the dry eye portfolio, which collectively grew by 20%. Bausch + Lomb Corp. (NYSE:BLCO) is focused on sustained growth within its Vision Care segment through continuous innovation. A key area of focus is the Daily SiHy lens category, where the company plans to improve its performance by introducing new options, such as multifocal and toric designs.

5. Cenovus Energy Inc. (NYSE:CVE)

Forward P/E Ratio as of April 21: 11.57

Number of Hedge Fund Holders: 39

Average Upside Potential as of April 21: 51.75%

Cenovus Energy Inc. (NYSE:CVE) develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products. It develops and produces bitumen and heavy oil in northern Alberta and Saskatchewan. Its oil sand assets include Foster Creek, Christina Lake, and Sunrise projects, as well as Lloydminster thermal and conventional heavy oil assets.

The company’s Oil Sands segment contributes to its overall upstream performance. In 2024, the Oil Sands segment achieved a record production of 610,700 BOE per day, which was an increase of ~3% year-over-year. This was fueled by increased production at the Sunrise project and new annual production records at the Foster Creek and Lloydminster thermal assets within this segment. Notably, in Q4 2024, the Oil Sands segment reached a new quarterly production record of 629,000 BOE per day.

Cenovus Energy Inc. (NYSE:CVE) now anticipates continued growth from its Oil Sands assets. The company completed a major turnaround at Christina Lake in Q3 2024. The Foster Creek optimization project, which was 64% complete at the end of 2024 with first oil expected in early 2026 and full ramp-up in 2027, will also contribute to increased production from this segment.

L1 Long Short Fund stated the following regarding Cenovus Energy Inc. (NYSE:CVE) in its first quarter 2024 investor letter:

“Cenovus Energy Inc. (NYSE:CVE) (Long +20%) shares performed strongly as the WTI oil price increased 16% to ~US$83/bbl, while refining margins in the U.S. Midwest improved dramatically from a low base. During March, Cenovus’s 2024 investor day was well received, where its 5-year outlook for the business included growth in upstream production of around 150m bbl/d above the current 800m bbl/d and a material turnaround of its downstream refining business. Over the next five years, the company expects to generate C$32b of cumulative free cash flow based on a US$75/bbl WTI oil price, a highly attractive prospect given its current market cap of ~C$51b. Furthermore, it has committed to return 100% of excess cash flow back to investors once it reaches its C$4b net debt target (expected in 2024). Cenovus’s strong cash flow generation, combined with the long-life nature of its oil sands assets and its low cost of production, make it one of our preferred Energy exposures.”

4. Precision Drilling Corp. (NYSE:PDS)

Forward P/E Ratio as of April 21: 9.39

Number of Hedge Fund Holders: 15

Average Upside Potential as of April 21: 53.25%

Precision Drilling Corp. (NYSE:PDS) is a drilling company that provides onshore drilling, completion, and production services to exploration and production companies in the oil and natural gas and geothermal industries. It operates through Contract Drilling Services and Completion & Production Services segments.

In 2024, the company experienced a 12% year-over-year increase in drilling activity in Canada. Precision also reported near full utilization of its Canadian Super Series rigs, which highlighted the demand for its high-specification drilling assets in the region. In Q4, Precision’s drilling activity in Canada averaged 55 rigs, which is an increase of 1 rig sequentially and 1 rig year-over-year.

The daily operating margins in Canada during Q4 were $14,559, which was an increase of ~$2,131 year-over-year. While this was slightly below guidance of $15,000 per day, these margins included ~$4 million in rig reactivation costs, which, if excluded, would have resulted in margin performance exceeding guidance. For Q1 2025, Precision Drilling Corp. (NYSE:PDS) anticipates its Canadian drilling margins to remain consistent with Q4 2024, in the range of $14,500 to $15,000 per day.

3. Ero Copper Corp. (NYSE:ERO)

Forward P/E Ratio as of April 21: 4.89

Number of Hedge Fund Holders: 15

Average Upside Potential as of April 21: 59.64%

Ero Copper Corp. (NYSE:ERO) explores, develops, and produces mining projects in Brazil. Its flagship asset includes Caraiba operations that produce and sell copper concentrates located in northeastern Bahia State in Brazil, as well as gold and silver produced and sold as by-products.

The Caraiba Operations focuses on copper concentrate production with gold as a significant byproduct and achieved record copper production in Q4 2024. Throughout 2024, improved metal prices and stronger operating margins within the Caraiba Operations contributed to a cash flow from operations of $145.4 million for the entire company and an adjusted EBITDA of $216.2 million.

Ero Copper Corp. (NYSE:ERO) anticipates that Q1 2025 will be the softest for Caraiba as the company works to implement additional development at the Pilar mine, the benefits of which are expected to emerge over subsequent quarters. The mobilization of a second development contractor is also underway to enhance access to high-grade stopes and increase operating flexibility at Caraiba.

2. North American Construction Group Ltd. (NYSE:NOA)

Forward P/E Ratio as of April 21: 5.85

Number of Hedge Fund Holders: 11

Average Upside Potential as of April 21: 69.72%

North American Construction Group Ltd. (NYSE:NOA) provides mining and heavy civil construction services to customers in the resource development and industrial construction sectors. It offers mine management services for a thermal coal mine, and construction & operations support services in the Canadian oil sands region.

In Q4 2024, the company’s Australian Operations segment, which includes the contributions from the MacKellar Group and DGI, experienced sequential growth and increased by $31 million. Notably, MacKellar achieved its highest revenue quarter ever in Q4, and the Australian equipment fleet maintained a strong average utilization rate of 82%, which consistently exceeded 80% every month of the quarter.

The acquisition of MacKellar in October 2023 has proven to be a key catalyst for North American Construction’s diversification strategy. In its first year under North American Construction’s ownership, the Australian business exceeded expectations in several areas. The Australian Operations are projected to generate 60% of the company’s earnings before interest and tax (EBIT) in 2025.

Bonhoeffer Capital Management highlighted the company as a compelling investment due to its growth strategy and stated the following regarding North American Construction Group Ltd. (NYSE:NOA) in its Q3 2024 investor letter:

“Our broadcast TV franchises, leasing, building products distributors and dealerships and service outsourcing, fall into this category. One trend we find particularly compelling in these firms is growth creation through acquisitions, which provides synergies and operational leverage associated with vertical and horizontal consolidation. The increased cash flow from acquisitions and subsequent synergies are used to repay the debt and repurchase stock, and the process is repeated. This strategy’s effectiveness is dependent upon a spread between borrowing, interest rates and the cash returns from the core business and acquisitions. Over the past few months, long-term interest rates have been declining and short-term rates are expected to follow so a large and growing spread is available to firms, like North American Construction Group Ltd. (NYSE:NOA) who have a high return on capital. One way to measure future expected returns are post-synergy cash flow ratios paid for acquisitions. Another way to measure future growth in expected returns is through incremental return on incremental invested capital (RoIIC).

Many of our holdings used the acquisition/buyback model described above. Some of these firms have also used modest leverage to magnify the returns of equity to 20% and above, over the past five to ten years from the acquisition/buyback model. These firms include: Terravest, Asbury Automobile, Ashtead, Autohellas, Builders First Source and NOA. In addition, many of these firms are buying back stock and the modest current valuations make these buybacks accretive…” (Click here to read the full text)

1. Methanex Corp. (NASDAQ:MEOH)

Forward P/E Ratio as of April 21: 6.5

Number of Hedge Fund Holders: 27

Average Upside Potential as of April 21: 96.15%

Methanex Corp. (NASDAQ:MEOH) produces and supplies methanol in Asia Pacific, North America, Europe, and South America. It owns and leases storage and terminal facilities. The company serves chemical and petrochemical producers.

In Q4 2024, the company achieved produced sales of ~1.5 million tons of methanol at an average realized price of $370 per ton. This resulted in an adjusted EBITDA of $224 million for the quarter. For the full year of 2024, Methanex’s produced sales totaled ~6 million tons, with an average realized price of $355 per ton, generating an adjusted EBITDA of $764 million.

The company’s performance in the Methanol Production and Sales segment is influenced by global methanol pricing and market dynamics. In Q4 2024, tight market conditions in both the Atlantic and Pacific basins led to an increased methanol pricing environment, which continued into 2025. Methanex’s global average realized price of $370 per metric ton in Q4 was sequentially $14 higher. This strength persisted into Q1 2025, with European posted prices increasing significantly.

While we acknowledge the growth potential of Methanex Corp. (NASDAQ:MEOH), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than MEOH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.