3 Beaten-Down TSX Stocks to Buy Now for Superior Returns

These beaten-down Canadian stocks are trading cheap and could deliver superior returns in the medium to long term. 

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The Canadian stock market remains volatile as the newer variants of the coronavirus add uncertainty. Meanwhile, expensive valuation and expected moderation in growth has led to a sharp selloff in some of the top stocks listed on the TSX. Let’s look at three such stocks that are trading cheap and could deliver superior returns in the medium to long term. 

Air Canada

Air Canada (TSX:AC) bounced back sharply from its pandemic lows, thanks to the sequential improvement in its financial and operating performances and healthy outlook. However, the emergence of the Omicron variant of the coronavirus led investors to dump Air Canada stock. Further, higher jet fuel costs remain a drag. 

Notably, Air Canada stock reversed its recent gains and is now trading in the red on a year-to-date basis. However, I see the selloff in Air Canada stock as an opportunity for buying and holding it for the long term. While Air Canada stock could stay volatile in the near term, I am bullish on its long-term prospects. 

Air Canada’s revenue and capacity are improving on a quarter-over-quarter basis. Furthermore, it is managing its costs well. I believe the uptick in travel demand, its revenue diversification initiatives, reduction in operating losses, and strong liquidity positions it well to recover from the lows. 

Cineplex   

Like Air Canada, investors offloaded Cineplex (TSX:CGX) stock amid fears that the new variant of the COVID-19 virus could negatively impact its business, in turn, its stock price. Investors’ fear is obvious as the COVID-19 pandemic wiped out Cineplex’s revenues and profits last year. Furthermore, it eroded a significant portion of its market cap. 

It’s worth noting that Cineplex stock lost about 18% of its value in the last 10 trading days, providing a solid opportunity for buying for long-term investors. Further, I believe Cineplex’s challenges are temporary, especially amid the ongoing vaccination, and the company could continue to recover fast in the coming quarters.

During the last reported quarter, Cineplex stated that its entertainment venues and the entire theatre circuit are open. Furthermore, traffic is gradually increasing. While Cineplex is focusing on improving traffic, it lowered its monthly cash burn through prudent cost management. Looking ahead, its new subscription program, robust pipeline of films, return to normalcy will likely drive its stock price higher. 

Lightspeed

Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) stock has been beaten down badly amid a slowdown in its growth rate. To be precise, Lightspeed stock has declined by about 61% from its peak and is trading near its 52-week low. 

As Lightspeed stock has lost a significant amount of its value, I am bullish on its prospects and see multiple vectors for growth. I see the increased penetration of its payments solution as a key driver for its growth. Furthermore, increased revenues from existing customers and accretive acquisitions augur well for future growth. 

I see the recent decline in Lightspeed stock as a solid buying opportunity. Meanwhile, its expansion into new verticals and geographies, the launch of new products, and favourable sector trends will likely support its recovery.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends CINEPLEX INC. and Lightspeed POS Inc.

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