3 Undervalued Canadian Stocks Poised for Strong Upside

In a market where many stocks are priced for perfection, finding genuine value opportunities can be challenging. However, a few Canadian companies are flying under the radar, trading at attractive valuations despite solid fundamentals and long-term growth potential. Here are three undervalued TSX-listed stocks that could deliver significant returns over time.

1. EQB Inc (TSX:EQB)

EQB is a branchless Canadian bank that has seen its stock price decline this year, primarily due to recent earnings weakness. The bank raises funds through GICs (Guaranteed Investment Certificates) and earns income by lending to Canadian businesses and homeowners.

Two temporary factors have pressured EQB’s results:

• A narrow yield curve (small gap between short- and long-term interest rates), which has squeezed lending margins.
• Higher provisions for credit losses (PCLs), which reflect cautious risk management rather than actual loan losses.

Both headwinds are likely short-lived. As the yield curve eventually steepens and economic conditions stabilize, EQB’s margins and earnings should recover. Meanwhile, the stock is attractively valued at just 9.5× earnings, making it a compelling pick in today’s expensive market.

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2. Suncor Energy Inc (TSX:SU)

Suncor, one of Canada’s largest integrated energy companies, has come under pressure due to a soft earnings report. In its latest quarter, revenue and profits declined, largely because of lower oil prices during the period.

Looking ahead, the outlook appears more promising. Global oil demand continues to grow, while OPEC’s moderate production increases should support prices. Given this backdrop, Suncor’s valuation at 11.5× earnings looks reasonable. For value-focused investors seeking exposure to the energy sector, SU offers a balanced mix of income potential and upside if oil markets tighten further.

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3. goeasy Ltd. (TSX:GSY)

goeasy is a consumer lender and retailer, best known for its EasyHome stores across Canada. The company operates a unique two-pronged business model:

• EasyHome offers lease-to-own options for furniture, electronics, and appliances—generating revenue from both product sales and financing.
• EasyFinancial, the lending arm, provides consumer loans and earns income purely from lending activities.

This model has delivered exceptional growth. Over the past five years, goeasy has grown earnings at a 26% compound annual rate and maintained a robust 35% profit margin over the trailing 12 months. Despite this performance, the stock trades at only 9.9× earnings, 1.5× sales, and 2.1× book value, signaling significant undervaluation relative to its fundamentals.

Bottom Line

EQB, Suncor, and goeasy each face short-term challenges, but their strong business models, earnings power, and discounted valuations make them compelling opportunities for long-term investors. In a market dominated by expensive growth names, these three stocks stand out as value plays with meaningful upside potential.