4 TSX Stocks to Buy Now as Investors Rotate Back to Value

The stock market rotation that investors have been waiting for is no longer a prediction. It’s already happening.

Industrial, consumer defensive, and energy stocks have been leading markets higher in 2026 as technology names falter, with investors looking beyond AI for steadier returns in the real economy. The Canadian stock market plunged yesterday after the central banks of Canada and the U.S. both held their interest rates steady, with the TSX hitting its lowest closing level in almost two months. Today, commodity prices fell sharply in early morning trading, which could drive the resource-heavy main TSX index even lower.

So for Canadian investors who have been sitting on the sidelines waiting for a clear signal to put money to work, the signal has arrived. The question now is which TSX stocks are best positioned to keep compounding through a rotation that rewards cash flow, dividends, and sensible valuations.

Insurance stocks

Insurance can fit a value rotation beautifully as it can grow earnings without needing a booming consumer, and it can pay you for waiting. Higher interest rates can help investment income, while scale and distribution can keep margins steady.

Sun Life Financial (TSX:SLF) has been delivering steady, repeatable growth across insurance and wealth. In its fourth quarter of 2025, it reported underlying net income of $1.09 billion and underlying earnings per share of $1.96, while full-year 2025 underlying net income reached $4.2 billion and underlying earnings per share (EPS) came in at $7.45. Those numbers signal momentum, not just stability. All while trading at 14.6 times earnings with a 4% dividend yield.

For value-rotation investors who want a Canadian financial that earns steadily through any macro environment, Sun Life’s 14.6x valuation and 4% yield make it one of the more straightforward buys on the TSX right now.

Power Corporation of Canada (TSX:POW) adds a slightly different value flavour as it acts like a Canadian financial holding company with multiple engines under the hood. It owns major stakes in businesses tied to insurance, wealth, and asset management. Over the last year, two headlines stood out for value investors: leadership succession planning and an ongoing focus on share repurchases. Power’s third quarter of 2025 showed strong results, with net earnings from continuing operations of $703 million, or $1.10 per share, and adjusted net earnings from continuing operations of $863 million, or $1.35 per share. At writing, it trades at 14.6 times earnings with a 3.6% yield.

Power Corporation is the holding company pick — diversified across insurance, wealth, and asset management, with active buybacks and a 3.6% yield at 14.6x earnings. If the rotation rewards capital-return discipline, Power checks every box.

Energy retailers

A value rotation can also shine a light on businesses that sit close to the real economy, where cash flow shows up in everyday spending and energy demand. Retailers that can protect margins and keep traffic steady can look attractive when investors want dependable earnings. Integrated energy can also benefit because it throws off large free cash flow in decent commodity environments. The trick is to avoid names that rely on a perfect consumer or a perfect oil price.

Canadian Tire (TSX:CTC.A) has been proving it can grow through a choppy consumer backdrop, and it has paired that with a clear transformation plan. Over the last year, the dividend stock kept pushing its True North strategy, which aims to sharpen customer relationships, improve retail execution, and allocate capital more tightly. In its fourth quarter and full-year 2025 results, it reported consolidated comparable sales up 4.2% in Q4 and up 4.1% for the year, with full-year revenue rising 5.2% to $16,315.5 million. The outlook hinges on execution in 2026 as cost savings from True North show up more consistently, while demand holds up across its banners. And now, it trades at 13.5 times earnings, with a 3.8% yield to consider.

Canadian Tire is the consumer value pick — 13.5x earnings, 3.8% yield, and a transformation plan delivering comparable sales growth above 4%. In a rotation that rewards real-economy businesses over speculative bets, this is exactly the kind of name that gets rediscovered.

Suncor (TSX:SU) offers a mix of scale, cash flow, and shareholder returns. In the fourth quarter of 2025, it reported adjusted operating earnings of $1.33 billion, or $1.10 per share, and adjusted funds from operations of $3.22 billion, or $2.68 per share. Production helped, too, with upstream output around 909,000 barrels per day in the quarter, and management signalled a 2026 outlook that targets higher production while trimming capital spending versus 2025. And today, investors can grab it trading at 15.8 times earnings with a 3.2% yield.

Suncor is the energy rotation pick — integrated operations, record production, disciplined capital spending, and a 3.2% yield at 15.8x earnings. With energy stocks up more than 22% globally in 2026 and oil above US$100, the tailwind is already behind it.

Bottom line

The rotation back to value is already underway, and it’s a reminder of why owning businesses with real cash flow and sensible valuations matters. Sun Life and Power Corporation give you insurance and wealth earnings at 14-15 times earnings. Canadian Tire gives you a consumer transformation story at 13.5 times. Suncor gives you integrated energy cash flow with a production tailwind. And right now, even a $7,000 in each can provide ample income.

COMPANYRECENT PRICENUMBER OF SHARES YOU COULD BUY WITH $7,000ANNUAL DIVIDENDTOTAL ANNUAL PAYOUTPAYOUT
FREQUENCYSLF$90.3077$3.60$277.20QuarterlyPOW$68.79101$2.45$247.45QuarterlySU$76.9790$2.40$216.00QuarterlyCTC.A$191.9236$7.20$259.20Quarterly

None of these stocks is risk-free, but each one gives you a practical way to own value that still has room to surprise on the upside.

The post 4 TSX Stocks to Buy Now as Investors Rotate Back to Value appeared first on The Motley Fool Canada.

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• 1 Undervalued Canadian Stock Quietly Gearing Up for 2026

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