5 Undervalued Canadian Stocks To Buy Now

1. Bausch Health Companies Inc. (NYSE:BHC)

Number of Hedge Fund Shareholders: 44

Analysts’ Consensus Upside: 179%

Hedge funds and analysts both agree that Bausch Health Companies Inc. (NYSE:BHC) is the best undervalued Canadian stock to buy now. Bausch shares have continued to sink in 2022, falling by 73% to hit a 20-year low. Activist Carl Icahn, whose firm holds two seats on the company’s board, continues to hold the largest BHC position, while healthcare investor John Paulson, who serves as the Chairman of the Board, also owns a large stake in the pharmaceutical company.

Bausch Health Companies Inc. (NYSE:BHC), formerly known as Valeant, is in the midst of a transitional period under new CEO Thomas Appio, as it works to spin off its Bausch + Lomb eye business. The company also plans to spin off its Solta Medical aesthetic device division, but temporarily put those plans on hold earlier this year. Investors haven’t necessarily been thrilled with either of the proposed spin offs.

Bausch Health is also saddled with a mountain of debt which it’s working to restructure and pay down. Beneath all that turmoil is a company with a solid drug portfolio and stable of healthcare products which will generate sales of more than $8 billion this year. A sum-of-the-parts valuation by JPMorgan analyst Chris Schott last year concluded that BHC shares should be worth close to $40. The currently trade hands for just $7.63.

The Miller Value Partners Opportunity Trust Fund discussed some of the challenges that pulled down Bausch Health Companies Inc. (NYSE:BHC) shares during the second quarter in the fund’s Q2 2022 investor letter:

“Bausch Health Companies Inc. (NYSE:BHC) declined during the quarter as the company consummated its Bausch+Lomb IPO at valuations far below expectations, reported disappointing Q1 2022 results, and delayed its plan to spin out its Solta (aesthetics) business due to difficult market conditions. While the company spun off 10% of Bausch+Lomb (BCLO) they retained 90% of the company which they intend to distribute once they have met their target leverage ratio of 6.5-6.7x. The future spin-off value of the Bausch+Lomb piece represents a value of $12.55 per share, 39% above where Bausch Health is currently trading. The company recently appointed John Paulsen as Chair of the Board, which should accelerate value realization.”

For more of the latest stock picks worth considering for your portfolio, check out Best AI Penny Stocks Under $1 and 10 Stocks Under $50 To Buy.

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