What are we looking for?
With the year-end approaching, investors can look for stocks that have been beaten down over the past 12 months to gauge if they might have upside in the new year. This is also the time of year for tax-loss selling, which can drive down the price of stocks and present buying opportunities for other investors. Let’s have a look at some large-cap stocks that have had a down year and may be poised to advance in 2026. We ran this test last year, and some of those results are noted below.
The screen
We used stockcalc’s screener to select 10 stocks from the S&P/TSX 60 Index that are down the most year to date (as of Dec. 12). We then used stockcalc’s valuation tools to calculate fundamental (or intrinsic) valuation for each stock to see if they are under- or overvalued compared with their close price.
Overview of the techniques used:
- Discounted cash flow (DCF value) is a valuation technique in which cash-flow projections are discounted back to the present to calculate value per share.
- A price comparables (price comps) technique values the company on the basis of ratios from selected comparable companies.
- An adjusted book value (ABV) is calculated by multiplying book value per share by its 10-year average price-to-book ratio.
- If we have analyst coverage, we may consider the consensus target price.
More about stockcalc
Stockcalc is a fundamental valuation platform with tools to calculate and report on value per share for thousands of public companies listed on major North American stock exchanges. It also contains numerous tools to understand what the stocks you are investing in are worth. Globe Unlimited subscribers can subscribe to stockcalc using the promo code “Globe30,” which offers a 30-day free trial and special pricing for the second month.
What we found
You can see in the accompanying table the percentage difference between each stock’s recent close price and its intrinsic value. The “stockcalc valuation” column is a weighted calculation derived from our models and analyst target data, if used.
There are a number of ways these stocks can be looked at, including valuation (our methodology), ratios and against their peer groups. The strategies can include mean reversion and value contrarian.
Mean reversion is a strategy that looks for stocks that have underperformed significantly in one year and may revert to their mean performance in subsequent years, particularly if their underperformance was owing to temporary issues or market overreactions. This strategy relies on the idea that extreme deviations from a stock’s historical performance are often unsustainable.
Value contrarian is a strategy that selects underperforming stocks that have become undervalued relative to their fundamentals, creating opportunities for future outperformance. This strategy combines mean reversion with fundamental value investing principles.
Number Cruncher: Canadian energy stocks with strong profitability and renewed momentum
As noted above, we ran this analysis a year ago and those 10 stocks returned an average of 20.4 per cent for the period of Dec. 15, 2024, to Dec. 12, 2025 (excluding dividends), compared with 20.6 per cent for the overall market during the same time frame. There was one gold stock in last year’s list and no financial stocks. (Materials and Financials have been the top-performing sectors over the past 12 months.)
For the current list I also looked at these stocks over the last five years. Three have negative five-year returns: Canadian National Railway Co. (CNR-T), Telus Corp. T-T and Canadian Apartment Properties REIT CAR-UN-T. Two had returns in excess of 100 per cent: Constellation Software Inc. CSU-T and Tourmaline Oil Corp. TOU-T
In that time the XIU (Ishares S&P TSX 60 Index ETF XIU-T) returned 77 per cent (excluding dividends). For perspective, the 77 per cent for the XIU is a compound annual growth rate of 11.8 per cent over that five-year period.
Let’s look at a couple of stocks that made our list this year:
It is certainly worth looking at Telus, given how it is held by so many dividend investors. Over the past 12 months, its dividend yield has just offset its price decline for a total return of zero. (The same is essentially true for the past five years, too.)
Telus provides a range of telecommunications and information technology products and services in Canada. The technology segment offers telecommunications products and services, network services, health care services, mobile technology equipment and data services.
The customer experiences segment provides digital customer experience and digital-enablement services, including artificial intelligence and content management. Our models and the analyst consensus are both showing upside to the price over the next 12 months. The risks continue to be the high debt load and a dividend payout ratio of over 200 per cent.
Constellation Software has fallen 26 per cent over the past 12 months after founder and long-time CEO Mark Leonard announced he was stepping down from his role. The company has also faced growing concerns about how artificial intelligence will affect the business, while profits have declined despite strong revenue and free cash flow growth.
It is worth noting that the stock is up over 100 per cent in the past five years. Constellation acquires, builds, and manages software businesses to develop software for public and private-sector markets. It operates in Canada and internationally. This is another stock where both our models and analyst consensus see upside over the next 12 months.
Investing involves risk. Stockcalc accepts no liability whatsoever for any loss or damage arising from the use of this analysis.
Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.
Editor’s note: An earlier version of the text of this story incorrectly identified Century Global Commodities as making this screen. It should have been Canadian National Railway.