4 Cheap (Under-$40) Canadian Stocks for Superior Returns

These cheap Canadian stocks have solid fundamentals and strong upside potential.

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While the volatility remains high in the market, several top Canadian stocks are trading at a multi-year low, providing an excellent opportunity for investors to buy them cheap. These TSX stocks have strong growth prospects and have the potential to deliver superior returns in the coming years. With cheap, high-growth stocks in the background, let’s look at five cheap (trading under-$40) stocks that could multiply investors’ wealth in the long term. 

Lightspeed

Shares of the commerce-enabling company Lightspeed (TSX:LSPD)(NYSE:LSPD) are too cheap to ignore. It has lost nearly 80% of its value from the peak and looks highly attractive at current price levels. My bullish view about Lightspeed stock is based on the steep correction in its price and its high-growth business. 

The ongoing digital transformation could continue to benefit Lightspeed stock. Meanwhile, its expansion into high-growth markets, growing customer base, product launches, and increased penetration of payment offerings bode well for future growth. Further, the adoption of multiple modules by customers and strategic acquisitions will likely accelerate its growth and support the recovery in its share price. 

WELL Health

The recent selloff in WELL Health (TSX:WELL) stock has wiped out pandemic-related gains. Notably, Well Health stock corrected about 42% in six months, thus leading to a steep decline in its valuation. Well Health stock trades at a forward EV/sales multiple of 2.7, which is significantly below its historical average. Meanwhile, the strength in its base business and acquisitions provide a strong base for future growth. 

This tech-based healthcare services provider is growing its revenues at a breakneck pace. Meanwhile, it has delivered positive adjusted EBITDA in the past several quarters. Looking ahead, higher omnichannel patient visits, extensive patient services, a growing network of outpatient medical clinics, and acquisitions will likely drive WELL Health’s financials and, in turn, its stock price. 

Absolute Software

The COVID-triggered demand led to significant appreciation in Absolute Software (TSX:ABST)(NASDAQ:ABST) stock. However, economic reopening and selling in tech stocks wiped out a substantial portion of its market cap, making it highly attractive at current levels. 

While investors dumped Absolute Software stock due to the expected normalization in growth rate, it continues to grow rapidly, which is reflected through the strength in its annual recurring revenues. Further, its adjusted EBITDA has a CAGR of 51% since 2018, which is encouraging. Moreover, its growing geographic footprint, product expansion, large addressable market, and high client retention rate bode well for future growth. 

StorageVault Canada

Next up are the shares of StorageVault Canada (TSX:SVI), which provides storage services to individuals and commercial customers. The company has been growing rapidly on the back of increasing rentable space and has outperformed the broader markets over the past year. 

Looking ahead, the ongoing strength in its base business will likely drive its financial performance, thus supporting the uptrend in its stock. My bullish outlook is centered on StorageVault Canada’s growing portfolio of owned and managed stores. Meanwhile, its strong competitive positioning in Canada, acquisitions, higher occupancy rate, productivity-saving initiatives, and strong cash flows will likely accelerate its growth rate. 

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 Absolute Software Corporation and Lightspeed Commerce.

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