Earlier this year, as June came to an end, Brianne Gardner, the Senior Wealth Manager at Velocity Investment Partners, Raymond James, appeared on BNN Bloomberg to state that Canadian stocks are outperforming the US stocks in 2025. Investors are optimistic following Canada’s announcement that it is rescinding a digital services tax that targeted large tech companies. Gardner described her view on Canadian stocks as cautiously optimistic. She credited Canada’s earlier interest rate cuts compared to the US Fed for helping the country avoid a major recession, although she did note that it is still possible for a recession to occur later.
Gardner explained that the early strength in the TSX this year came from the energy and gold sectors, but the momentum now appears to be fading. She cited mounting uncertainty, softer economic data, and pressure from the trade talks. She also added that the TSX’s performance has been heavily concentrated in the materials and energy sectors, which have accounted for over 30% of returns. Gardner also explained that her firm uses a rules-based investing philosophy where a stock must rank at a minimum of 7/10. This is based on both fundamental and technical criteria. The fundamental analysis involves looking at about 12 different credentials, such as the cash flow, balance sheets, and upside potential. The technical analysis focuses on the entry point, such as whether the stock is above or below its 50-day moving average, and considers factors like dividend yield and P/E ratio.
That being said, we’re here with a list of the 11 most undervalued Canadian stocks to buy now.
A financial analyst looking at a monitor displaying the stocks of the public company.
Methodology
We sifted through the Finviz stock screener to compile a list of the top undervalued Canadian stocks with a forward P/E ratio under 15, as of August 6. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 2025.
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).
11 Most Undervalued Canadian Stocks to Buy Now
11. Bausch Health Companies Inc. (NYSE:BHC)
Forward P/E Ratio as of August 6: 1.53
Number of Hedge Fund Holders: 31
Bausch Health Companies Inc. (NYSE:BHC) is one of the most undervalued Canadian stocks to buy now. On July 29, Bausch Health Companies announced a definitive agreement to acquire DURECT Corporation (NASDAQ:DRRX). The acquisition is valued at ~$63 million upfront with potential for an additional $350 million in sales milestone payments, and will be an all-cash transaction.
Bausch Health is acquiring DURECT primarily for its lead asset, called larsucosterol. This novel therapeutic molecule is an epigenetic modulator that the FDA has granted Breakthrough Therapy Designation for the treatment of alcoholic hepatitis/AH, which is a life-threatening form of alcohol-associated liver disease.
AH is characterized by severe liver inflammation & necrosis and accounted for ~164,000 hospital admissions in the US in 2021. There are currently no FDA or European Medicines Agency/EMA-approved treatments for the condition. The acquisition of larsucosterol strengthens Bausch Health’s commitment to hepatology. Bausch Health plans to use its expertise to advance larsucosterol through a planned Phase 3 program.
Bausch Health Companies Inc. (NYSE:BHC) is a diversified specialty pharmaceutical and medical device company that develops, manufactures, and markets products in gastroenterology, hepatology, neurology, dermatology, generic pharmaceuticals, OTC products, aesthetic medical devices, and eye health.
DURECT Corporation (NASDAQ:DRRX) is a late-stage biopharmaceutical company that develops epigenetic therapies that target dysregulated DNA methylation to transform the treatment of serious and life-threatening conditions, such as acute organ injury.
10. Manulife Financial Corporation (NYSE:MFC)
Forward P/E Ratio as of August 6: 10.68
Number of Hedge Fund Holders: 32
Manulife Financial Corporation (NYSE:MFC) is one of the most undervalued Canadian stocks to buy now. On August 6, Affiliated Managers Group Inc. (NYSE:AMG) announced that it agreed to sell its interest in Comvest Partners’ private credit business to Manulife Financial Corporation. The transaction is expected to close in Q4 2025, subject to customary closing conditions.
Affiliated Managers Group, or simply AMG, is set to receive ~$285 million in total cash for the sale. The company will also retain its interest in Comvest’s private equity business, along with an interest in the carry from certain existing private credit funds and a share of Comvest’s invested capital in those funds. AMG will also sell its interest in the AMG Comvest Senior Lending Fund joint venture.
For over 25 years, Comvest Partners has focused on providing capital to North American middle-market companies. The partnership between AMG and Comvest began over 5 years ago. At the start of the collaboration, Comvest’s private credit business had $2 billion in assets under management/AUM, which grew to $14 billion at the time of the acquisition announcement.
Manulife Financial Corporation (NYSE:MFC) provides financial products and services through 3 segments: Wealth & Asset Management Businesses, Insurance & Annuity Products, and Corporate & Other.
Affiliated Managers Group Inc. (NYSE:AMG) is an investment management company that provides investment management services to mutual funds, institutional clients, and high-net-worth individuals in the US.