Three cheap Canadian stocks

An airline, an infrastructure giant and a uranium producer are all trading at over 20% discount right now

Vikram Barhat 5 December, 2018 | 6:00PM
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With less than a month to go before the end of 2018, all indications point to the TSX ending the year in the red. Buffeted by the recent market weakness, the S&P/TSX Composite index is down 5% for the year to date, as of November 27. Meanwhile, the S&P 500 eked out a modest 2% gain for the same period, and is likely to end the year in the green.

A tepid 2018 after a blockbuster 2017 is a sobering reminder that volatility is an inextricable part of the investing game. Investors should temper their emotions when things get choppy, and should rein in their enthusiasm when equity markets are going gangbusters.

Thankfully, Canadian investors only need look in their own backyard to find some attractive picks supported by strong fundamentals. Select domestic stocks in Morningstar’s Canadian equity coverage universe appear unreasonably undervalued, driven by short-term market sentiment or underappreciated potential. The price disconnect detracts from the fact that these companies have undeniable prospects for sustained growth, supported by healthy product demand, durable business, pricing power, and competitive advantage. As a result, these stocks are currently trading far below their fair value, offering a margin of safety and significant odds for value appreciation, according to Morningstar equity research.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Air Canada Class B22.91 CAD-1.04Rating
Cameco Corp32.06 CAD-0.53
TC Energy Corp68.02 CAD0.62Rating

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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