In this piece, we will take a look at ten oversold Canadian stocks to buy. If you want to skip an introduction to the Canadian economy and the stock market, then take a look at 5 Oversold Canadian Stocks To Buy.
Canada and the U.S. are tightly interlinked. The countries have a nearly two centuries-old relationship. The US and Canada are strong trading partners, with Canada being America's largest trading partner as of 2021 end.
This close relationship between the two countries also leads to several Canadian firms seeking to take advantage of America's lucrative capital markets and raising equity capital by selling shares on exchanges such as the New York Stock Exchange (NYSE) and the NASDAQ. More than two hundred Canadian firms are listed on both the Toronto Stock Exchange (the ten biggest stock exchange in the world and the third biggest in North America as of January 2023) and the NYSE and NASDAQ. This figure has grown significantly since data from the Bank of Canada shows that twenty years back, in 2003, 181 Canadian firms had listed their shares on U.S. exchanges, which itself had marked 100% growth over the previous two decades. According to the bank, some of the benefits to investors of Canadian firms from listing on U.S. exchanges include a broader risk base as more investors share it and reduced transactional costs due to greater liquidity.
When we look at the number of total companies that are listed on the NASDAQ and the NYSE, it would appear that perhaps more Canadian firms should be selling their shares in America. After all, there are more than two thousand firms that have listed their shares on the NASDAQ, so the Canadian share of the total pie is nevertheless quite small. This is due to several factors such as different reporting requirements for Canadian firms (for instance, Canadian firms are mandated to publish earnings reports in IFRS) which can lead to two balance sheets and a less diversified economy that with fewer sectors with large companies.
As opposed to the U.S., where technology is the king of the stock market, in Canada, some of the largest firms are in traditional sectors such as finance, energy, and industrial segments. While America's stock markets are dominated by well known household name firms such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), most people are unlikely to know which is the biggest Canadian company in terms of market capitalization.
Shifting gears and taking a look at what's happening at the other side of the border, like most other countries, Canada too is battling the bane of high inflation. The overall annual inflation rate in the country stood at 2.8% as of June 2023, marking a 0.6% decrease over the figures in May. This drop was fueled primarily by a 16% reduction in energy prices. Canada exports copious amounts of oil, a drop in global energy prices also benefits the country since a large portion of its refining needs are also met by imports. However, while energy costs dropped, consumers still continued to feel the inflationary heat, as grocery prices and mortgage interest costs jumped significantly as well. Data from Statistics Canada shows that in June, groceries were up by 9.1%, marking a ten basis point increase over May's reading. Bakery products were the worst offenders as their prices grew by 12.9% in May while fresh fruits jumped by 10.4%. However, the high interest rate environment, which has seen Bank of Canada raise interest rates to 4.75%, has made its impact on mortgage interest payments as they grew by 30% in June.
Looking at the stock market, when compared to their American peers, Canadian stocks have seen rather modest returns this year. For instance, the S&P/TSX Composite Index has returned 3.48% year to date, which pales in comparison to multi double digit returns offered by indexes such as the NASDAQ 100. However, this doesn't mean that all Canadian firms have had a poor run on the market. For instance, Hut 8 Mining Corp. (NASDAQ:HUT) is up 296% year to date and Bitfarms Ltd. (NASDAQ:BITF) is up by a slightly lower 281%. Both of these are penny stocks and operate in the cryptocurrency mining sector.
So, with the backdrop, let's take a look at some oversold Canadian stocks. For more details about oversold stocks, you can check out 10 Oversold Bank Stocks To Buy. The firms that top this list are GFL Environmental Inc. (NYSE:GFL), TELUS International (Cda) Inc. (NYSE:TIXT), and Fusion Pharmaceuticals Inc. (NASDAQ:FUSN).
To compile our list of the most oversold Canadian stocks, we selected Canadian stocks that were rated Buy or better on average and had a Relative Stock Index (RSI) score of less than 40.
10 Oversold Canadian Stocks To Buy
10. ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA)
Latest 14 Day RSI Score: 31.26
ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is a biotechnology company that provides substances and compounds that generate antibodies used to fight infection and related products that enable peptide production and immunization screening. The firm's second quarter of 2023 earnings missed analyst estimates, and the two analysts that cover the stock have rated it as a Buy. A penny stock, its shares are down by more than fifty percent year to date.
During Q1 2023, only one of the 943 hedge funds that are part of Insider Monkey's database had owned a stake in ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA). Ken Griffin's Citadel Investment Group is the firm's lone hedge fund investor since it owns 145,514 shares that are worth $403 million.
Along with TELUS International (Cda) Inc. (NYSE:TIXT), GFL Environmental Inc. (NYSE:GFL), and Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is an oversold Canadian stock to Buy.
9. Repare Therapeutics Inc. (NASDAQ:RPTX)
Latest 14 Day RSI Score: 30.16
Repare Therapeutics Inc. (NASDAQ:RPTX) is an advanced biotechnology company that develops products to repair DNA damage that can lead to tumors and other complications. The firm has missed analyst EPS estimates in three out of its four latest quarters, but despite this, the shares are rated Strong Buy on average. In fact, positive ratings have continued for the firm as of late, with Stifel upgrading the stock to Buy in June 2023. Repare Therapeutics Inc. (NASDAQ:RPTX)'s average share price target is $27, for a sizeable upside over the current price.
After sifting through 943 hedge funds for their first quarter of 2023 investments, Insider Monkey discovered that 15 had held the firm's shares. Repare Therapeutics Inc. (NASDAQ:RPTX)'s largest investor out of these is Mark Lampert's Biotechnology Value Fund / BVF Inc with an $81 million stake that comes courtesy of 8.2 million shares.
8. KWESST Micro Systems Inc. (NASDAQ:KWE)
Latest 14 Day RSI Score: 29.42
KWESST Micro Systems Inc. (NASDAQ:KWE) is an aerospace company that is headquartered in Vancouver, Canada. It sells products to both military and civilian users, with the portfolio consisting of items such as laser defense and drone countering systems. The firm was out with a crucial product upgrade in July when it shared that it had filed a patent in the U.S. for a product that will enable users to detect lasers such as LIDAR and even determine the source of the laser and the object that is generating it.
Insider Monkey took a look at 943 hedge fund portfolios for this year's March quarter and found two KWESST Micro Systems Inc. (NASDAQ:KWE) investors.
7. Restaurant Brands International Inc. (NYSE:QSR)
Latest 14 Day RSI Score: 29.13
Restaurant Brands International Inc. (NYSE:QSR) owns popular fast food and restaurant joints such as Tim Hortons and Burger King. Through these, it sells a variety of different products such as coffee, hamburgers, chicken, fries, and other eatables. As consumer spending continues to remain elevated and the service sector generates strong employment, Restaurant Brands International Inc. (NYSE:QSR)'s shares are up by more than 12% year to date. However, the firm's second quarter results might be a crucial one to watch out for, since Starbucks missed some sales estimates in its results for the period.
By the end of March 2023, 27 of the 943 hedge funds surveyed by Insider Monkey had held the firm's shares. Restaurant Brands International Inc. (NYSE:QSR)'s largest investor in our database is Bill Ackman's Pershing Square since it owns 24 million shares that are worth $1.6 billion.
6. Theratechnologies Inc. (NASDAQ:THTX)
Latest 14 Day RSI Score: 25.43
Theratechnologies Inc. (NASDAQ:THTX) is the third biotechnology and penultimate biotechnology firm on our list. It develops treatments for people suffering from HIV complications, with the products helping them lead a better life. On the earnings front, Theratechnologies Inc. (NASDAQ:THTX) has not been performing well, as it has missed analyst EPS estimates in three of its latest four quarters - including Q2 2023.
Five of the 943 hedge funds part of Insider Monkey had owned a stake in Theratechnologies Inc. (NASDAQ:THTX) as of Q1 2023. Guy Levy's Soleus Capital is the largest shareholder through a $7.3 million stake.
GFL Environmental Inc. (NYSE:GFL), Theratechnologies Inc. (NASDAQ:THTX), TELUS International (Cda) Inc. (NYSE:TIXT), and Fusion Pharmaceuticals Inc. (NASDAQ:FUSN) are some oversold Canadian stocks with strong analyst sentiment.
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Disclosure: None. 10 Oversold Canadian Stocks To Buy is originally published on Insider Monkey.