Financial Insights That Matter
We recently published a list of 10 Undervalued Canadian Stocks to Buy Now. In this article, we are going to take a look at where The Toronto-Dominion Bank (NYSE:TD) stands against other undervalued Canadian stocks to buy now.
Q1 2025 saw some challenges to the financial markets, primarily because of trade issues, says Sun Life (a Canadian-based international financial services company). The US decided to impose extra taxes, known as tariffs, on goods coming from numerous countries, including Canada. This move impacted the investors’ sentiments as to how it might slow down business and economic growth, not only in Canada but globally. The firm noted that Canada’s economy remains strong, and the BoC is no longer concerned with inflation. It lowered the interest rate by 50 bps to 2.75% as an effort to manage the economic impact of US tariffs.
Canada’s economy strengthened at the end of 2024, says Sun Life, thanks to the lower interest rates. That being said, the markets remain nervous about economic strength. As per the firm, Canada’s economy saw a growth of 2.6%, annualized over Q4 2024. Consumer spending acted as the critical growth driver. Also, reduced interest rates aided in driving consumer spending. The country’s economy also benefited from the stronger exports.
The firm also highlighted that Canada’s unemployment rate sat at 6.6% as of February. BoC decided to reduce rates in part because of the improving labour market. Notably, Canadian equities touched a new high early in the quarter. Talking about the sectors, the Materials and Utilities sectors were tagged as the strongest performers. However, the Health Care and IT sectors saw the weakest returns.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Bloomberg, while quoting Scotiabank, mentioned that Canada’s stock markets are expected to outperform after avoiding the worst of Trump’s tariffs. Scotia Capital Inc. provided a double upgrade to Canadian equities, from “Underweight” to “Overweight,” with analysts highlighting that both Canada and Mexico have managed to dodge the bullet in the escalating trade war. As per Bloomberg Intelligence analysts Gillian Wolff and Gina Martin Adams, TSX valuations are low relative to pre-pandemic levels, which offer a buffer against economic volatility and trade war.
The analysts at Scotia Capital Inc. believe that the escalating trade war announcement is negative for the US and the rest of the world. Scotiabank has dropped emerging market equities to “Underweight” from “Neutral,” mentioned Bloomberg.
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