1 Oversold TSX Stock That’s So Cheap, it’s Ridiculous

An oversold TSX stock can be a gift when it’s the right company. Sometimes the market isn’t reacting to the business; it’s reacting to fear, headlines, or short-term noise. When a strong company with steady earnings and durable cash flow gets pushed down for reasons that don’t touch its long-term fundamentals, investors get a rare chance to buy quality at a discount. It’s like finding a winter coat on clearance in July. Nothing is wrong with the coat; the timing just isn’t trendy. With stocks, the payoff can be even bigger because once sentiment shifts back to normal. The share price often snaps back fast, rewarding anyone who bought while everyone else was panicking. That’s exactly what’s happening with this TSX stock.

FTS

Fortis (TSX:FTS) is one of the most dependable companies in Canada, running regulated electric and gas utilities across North America. Its business model is built on long-term, government-approved rates that provide predictable cash flow year after year. That stability has allowed Fortis to raise its dividend for more than 50 consecutive years, making it one of the continent’s most reliable income generators.

The TSX stock continues to expand its rate base through steady investment in modern infrastructure, giving it a clear growth runway that isn’t tied to economic cycles or commodity prices. For long-term investors, it’s the kind of quiet compounding machine that does its best work in the background.

Fortis also benefits from the essential nature of its services. No matter what the economy is doing, people still need electricity, businesses still need energy, and governments still need reliable regional grids. That makes earnings highly predictable and gives Fortis the confidence to maintain strong forward guidance. Its diversified footprint across Canada, the U.S., and the Caribbean helps reduce regional risk. Furthermore, its conservative management team ensures growth remains steady rather than erratic.

Into earnings

Recent earnings highlighted exactly why Fortis is built for resilience. The TSX stock delivered higher earnings driven by continued growth in its regulated rate base, supported by billions in ongoing capital investment. Cash flow stayed strong, and management reaffirmed its multi-year outlook, expecting annual rate-base growth of about 6%.

This directly translates into long-term earnings growth. Even with inflation and higher interest rates affecting the broader utility sector, Fortis maintained profitability and protected its margins through disciplined cost control and regulatory frameworks.

The TSX stock also reassured investors about the safety of its dividend, emphasizing that its payout remains well supported by stable cash generation. Fortis’s capital plan remains on track, and it continues to strengthen grid reliability, expand clean-energy initiatives, and reinforce infrastructure across all operating regions. Nothing in the latest earnings pointed to a company under pressure. Only a company continuing its steady march forward. Yet the market hasn’t rewarded the performance, creating a disconnect between sentiment and reality.

Foolish takeaway

Today, Fortis is oversold to the point of being almost ridiculous. The TSX stock has pulled back far more than its fundamentals justify. Utilities everywhere were hit by rising interest rates, but Fortis’s business model didn’t change. Its earnings didn’t collapse, its dividend didn’t weaken, and its growth plan didn’t shrink. Investors simply rotated out of defensive stocks during a risk-on phase, leaving Fortis trading at one of its most attractive valuations in years. For a company with a 50-year dividend-growth streak, regulated cash flow, and a multi-decade investment pipeline, this kind of discount is rare. Fortis could pay ample dividends, even from a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTFTS$69.40100$2.51$251.00Quarterly$6,940.00

The market has essentially punished Fortis for being boring, which is exactly what makes it appealing now. You’re getting a high-quality utility at a price usually reserved for struggling companies, even though Fortis continues to grow earnings, raise dividends, and invest in infrastructure that will pay off for decades. When sentiment eventually swings back toward stability, Fortis is positioned to rebound quickly. For patient TFSA or retirement investors, an oversold Fortis isn’t just a good opportunity; it’s one of the most misunderstood bargains on the TSX right now.

The post 1 Oversold TSX Stock That’s So Cheap, it’s Ridiculous appeared first on The Motley Fool Canada.

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More reading

• Defensive Stocks Every Canadian Investor Needs During Market Volatility
• 2 Canadian Stocks to Buy and Hold for Life in a TFSA
• TFSA: 2 TSX Stocks for Your $7,000 Contribution
• 2 Dividend Stocks to Double Up on Right Now
• TFSA: 3 Top TSX Stocks for Your $7,000 Contribution

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.