We recently published a list of 10 Cheap Canadian Stocks to Buy According to Analysts. In this article, we are going to take a look at where Hudbay Minerals Inc. (NYSE:HBM) stands against other cheap Canadian stocks to buy according to analysts.
Canadian Market Outlook 2025
In January, RBC Global Asset Management released its Market Outlook for Canada. Scott Lysakowski, the Managing Director & Senior Portfolio Manager, Head of Canadian Equities reflected on the Canadian market’s performance in 2024. He noted that the Canadian equity market, particularly the S&P/TSX Composite Index, experienced a notable year. The TSX achieved a total return of approximately 21%, which Lysakowski thinks is commendable, especially considering the broader economic context. However, this performance was somewhat overshadowed by the US market, where mega-cap stocks led the charge. The TSX’s gains, while substantial, were not as robust as those in the US, which Lysakowski attributed to the dominance of large-cap stocks in the latter part of the year.
Lysakowski noted that one interesting observation from 2024 was the brief increase in market breadth following significant events, such as elections. During these periods, mid-cap and small-cap stocks temporarily outperformed, suggesting a potential shift towards broader market participation. However, this trend was short-lived, and the year concluded with mega-cap stocks once again driving the majority of returns. The top ten stocks in the market contributed significantly to the overall performance, highlighting the persistent dominance of these large players.
Moreover, in analyzing the composition of returns for the TSX, Lysakowski suggests that it’s clear that the 21% total return consisted of a 3% dividend yield, with the remaining 18% split between earnings growth and valuation changes. Specifically, earnings growth accounted for about 9%, and multiple expansions contributed around 7%. In contrast, the US market, particularly mega-cap stocks, saw more pronounced earnings growth and multiple expansions, which explains their superior performance.
Looking ahead to 2025, Lysakowski noted that the outlook remains uncertain, partly due to macroeconomic factors such as the weakness in the Canadian dollar. This currency volatility is a significant concern for Canadian equities, as it impacts both investor sentiment and the macroeconomic outlook. Furthermore, the divergence in earnings growth between mega-cap and small-cap stocks suggests that until smaller companies demonstrate stronger earnings growth, the dominance of large-cap stocks will likely continue. This dynamic will be crucial to monitor in the coming year, as broader market participation could have a positive impact on Canadian equities.
Our Methodology
For this article, we used the Finviz stock screener, Yahoo Finance, Seeking Alpha, and CNN as our sources. Using the screener we aggregated a list of Canadian stocks that are trading below a Forward P/E of 15, with earnings growth expectations this year, and an upside potential of more than 10%. Next, we cross-checked the FWD P/E for each stock from Seeking Alpha and earnings growth from Yahoo Finance. Lastly, we ranked the stocks in ascending order of the average upside potential. Please note that the data was recorded on March 3rd, 2025.
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).
An aerial view of a copper mine, showing the intricate workings of heavy machinery.
Hudbay Minerals Inc. (NYSE:HBM)
Forward P/E Ratio: 11.2
Earnings Growth This Year: 32.29%
Analyst Upside Potential: 47.97%
Hudbay Minerals Inc. (NYSE:HBM) is a Canadian company that focuses on mining copper. It operates in several countries, including Canada, Peru, and the United States. It operates three main mines including, Constancia Mine, Snow Lake Operations, and Copper Mountain Mine. In addition, the company is developing new copper mines and projects including, Copper World in Arizona, Mason Project in Nevada, and Llaguen Project in Peru.
In 2024, Hudbay Minerals Inc. (NYSE:HBM) achieved a record annual revenue of $2.021 billion and adjusted EBITDA of $822.5 million. This was driven by exceptional production levels and strong cost management. The gold production exceeded expectations, while copper and silver outputs increased by 5% and 11%, respectively, compared to 2023. Management noted that the operational efficiencies in Peru and Manitoba, along with advancements at the Copper Mountain mine, contributed significantly to these results. Looking ahead the company anticipates stable copper production with competitive margins. It plans to invest in growth projects, including mill throughput enhancements in British Columbia and Peru, and further development of the Copper World project in Arizona. It is the best cheap Canadian stock to buy according to analysts.
L1 Long Short Fund stated the following regarding Hudbay Minerals Inc. (NYSE:HBM) in its Q2 2024 investor letter:
“Hudbay Minerals Inc. (NYSE:HBM) (Long +31%) shares rallied over the quarter driven by rising copper and gold prices, as well as strong production results. The company’s first quarter results showed higher gold production and robust operating performance at both its major assets, which exceeded consensus expectations. In addition, the company announced a ~US$400m equity raise to support balance sheet de-leveraging and fund its key growth projects. Hudbay is a mid-tier mining company primarily producing copper, alongside gold and zinc, with its key assets located in Canada and Peru. We are attracted to Hudbay due to our positive medium-term outlook for copper and the company’s strong near-term free cash flow generation. This cash generation potential will allow the company to de-lever and recycle capital back into its highly prospective exploration program and major growth projects, most notably its Copper World project in Arizona.”
Overall, HBM ranks 1st on our list of cheap Canadian stocks to buy according to analysts. While we acknowledge the potential of HBM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HBM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
