Traders usually keep away from shares which can be lagging, fearful that they may very well be “falling knives” which they need to avoid. However some beaten-down names could be sleeping giants — with robust fundamentals and long-term progress potential. When you’re seeking to purchase high quality Canadian firms on sale, these two shares deserve your consideration now.

CN Rail: A historic titan on non permanent tracks

Canadian Nationwide Railway (TSX:CNR) has been on a downward pattern since early 2024, with its inventory falling greater than 20% from its peak. The explanations? An ideal storm of disruptions — together with labour disputes, wildfires, and extra just lately, uncertainty stemming from U.S. tariff modifications this 12 months. However these points, whereas impactful within the quick time period, don’t erase CN Rail’s long-term observe report of success.

Over the previous twenty years, CN Rail has persistently grown its earnings and remained worthwhile via financial cycles. On the present value of $134.49 per share at writing, the inventory trades at a blended price-to-earnings (P/E) ratio of roughly 18.2 — a few 15% low cost in comparison with its historic common.

Much more compelling is the dividend yield. The inventory now yields about 2.6%, which is about 37% greater than its five-year common of 1.9%. That’s a robust sign that the inventory is undervalued. Administration has a dependable historical past of dividend progress. Lengthy-term buyers can proceed to count on rising earnings from the industrial inventory.

When you’re in search of a steady, defensive enterprise that might rebound as soon as short-term headwinds subside, CN Rail is value accumulating earlier than the market wakes up.

Constellation Software program: A uncommon dip in a tech juggernaut

Constellation Software program (TSX:CSU) is one other title that’s too good to miss. The inventory initially dipped about 15% from its 2025 excessive of round $5,200 to $4,400 — commonplace for a high-flying tech inventory. However what actually shook the market was the information that founder and CEO Mark Leonard was stepping down from his function of president of the corporate resulting from well being causes.

Following the announcement, the inventory had a knee-jerk response, dropping to as little as $3,400. Nonetheless, it shortly rebounded to roughly $4,029 per share — and did so on above-average buying and selling quantity, a transparent signal that buyers see this as a buy-the-dip alternative.

Constellation’s long-term observe report is nothing in need of phenomenal. Over the previous decade, it has delivered returns of about 23% yearly — sufficient to show a $10,000 funding into over $80,000. And even now, after the rebound, the inventory nonetheless trades at a good valuation relative to its historic norms. Analysts see additional upside, with the consensus value goal implying a significant low cost of 26%.

Management continuity additionally helps ease issues. Whereas Mark Leonard is stepping again from day-to-day operations, he stays on the board. The brand new president, Mark Miller, beforehand served (and stays) as COO and has deep operational data of the enterprise — making this a seamless transition slightly than a dangerous reset.

Investor takeaway: Purchase earlier than the herd returns

Each CN Rail and Constellation Software program are quickly out of favour — however that’s precisely what makes them compelling. They’re business leaders with confirmed observe information, robust fundamentals, and now, enticing valuations.

Don’t sleep on these two Canadian shares. Good buyers are wakeful — and already shopping for the dip.