We recently published a list of the 10 Most Undervalued Canadian Stocks to Buy According to Wall Street Analysts. In this article, we are going to take a look at where Gildan Activewear Inc. (NYSE:GIL) stands against other undervalued Canadian stocks according to Wall Street analysts.
As February was concluding, Reuters reported that Canada’s economy showed unexpected strength in Q4 2024, with an annualized growth rate of 2.6%. Household spending in particular, which makes up over half of the total GDP, rose by 1.4% in Q4. Business investments, which were stagnant for the past 11 quarters, finally showed positive momentum with a 0.7% growth in Q4. This was fueled by a 4.2% surge in investment in machinery and equipment. On a per capita basis, real GDP rose by 0.2% in Q4, which represents the second increase in the last 11 quarters. However, recently, amidst concerns over a US-led trade war, a Reuters poll from April indicates rising recession risks for Canada, which will potentially trigger at least two more Bank of Canada rate cuts this year, despite a temporary 90-day pause on some reciprocal tariffs announced by the US. Economists have now lowered Canada’s growth forecasts to 1.2% for this year and 1.1% for the next, down from 1.7% and 1.6% respectively. All the economists surveyed agree that the US tariffs have negatively affected business sentiment. Inflation is projected to average 2.4% in 2025 and 2.1% in 2026.
On April 7, Steve Odland, The Conference Board president and CEO, joined CNBC’s Special Report to talk about the impact of tariff-led uncertainty on CEO sentiments. Steve Odland emphasized that CEOs need clarity on numbers, costs, and the rules of the game to plan effectively. While CEOs felt somewhat positive about the general direction of the economy, the introduction of tariffs had thrown everything into confusion. Odland described the situation as chaotic because many had expected tariffs to target countries like China, not close allies such as Canada and Mexico. This move was a shock to the system and raised questions about whether the tariffs were a temporary negotiating tactic or a long-term policy change, which further complicates business planning.
In a conversation regarding the expectation of certain countries to come to the negotiating table, Odland responded that some countries, including Canada and Mexico, would likely be prioritized for quick resolution due to their importance. This is because of the integrated nature of the North American supply chain, especially in industries like automotive manufacturing. The conversation suggested that if firm deals could be reached with Canada, Mexico, China, Vietnam, and Taiwan, ideally resulting in zero tariffs, business confidence would improve.
Our Methodology
We first used the Finviz stock screener to compile a list of cheap Canadian stocks that had a forward P/E ratio under 15. We then selected the 10 stocks with high upside potential of over 35%. The stocks are ranked in ascending order of their upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024, which was sourced from Insider Monkey’s database.
Note: All data was sourced on April 21.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A closeup of a woman in a fashionable activewear outfit, grinning confidently.
Gildan Activewear Inc. (NYSE:GIL)
Forward P/E Ratio as of April 21: 11.64
Number of Hedge Fund Holders: 25
Average Upside Potential as of April 21: 48.75%
Gildan Activewear Inc. (NYSE:GIL) manufactures and sells various apparel products. It provides various activewear products, such as T-shirts, fleece tops & bottoms, sports shirts, polos, and tank tops. Some of its brands include Gildan, Gildan Performance, Gildan Hammer, Gildan Softstyle, Comfort Colors, American Apparel, and Champion.
In Q4 2024, net sales in the company’s Activewear segment rose by 11% year-over-year, which was fueled by higher sales volumes across various channels and product lines. Gildan is capturing the market due to strong consumer response to product innovations like the soft cotton technology. For the full year 2024, if the impact of the Under Armour phase-out is excluded from the Hosiery and Underwear category, the Activewear segment’s growth aligns with the mid-single-digit increase observed in that category.
The expansion of Gildan Activewear Inc.’s (NYSE:GIL) Champion brand through distributors in the printwear channel is also expected to contribute to market share gains in 2025. Moreover, Gildan is benefiting from a changing competitive landscape with some players exiting the market. The company’s international Activewear business has seen a substantial 20% increase in sales in the last two quarters.
Overall, GIL ranks 7th on our list of the most undervalued Canadian stocks to buy according to Wall Street analysts. While we acknowledge the growth potential of GIL, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GIL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
