The central bank’s aggressive rate hikes to control inflation and economic uncertainty have weighed on TSX stocks. Thanks to the correction, several fundamentally strong Canadian stocks are trading dirt cheap. This provides an opportunity for investors to buy these stocks at prices significantly below their highs and benefit from the recovery in their prices.
Against this background, let’s look at three bargain stocks you can buy today for solid capital gains.
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goeasy
goeasy (TSX:GSY) is a must-have stock near the current levels. Shares of this subprime lender corrected, as investors expected macro weakness to take a toll on its financials. However, that didn’t play out, as the company continues to deliver stellar sales and earnings growth.
While goeasy’s sales and earnings are growing at a double-digit rate, its stock is trading at a price-to-earnings multiple of 6.8 — significantly lower than its historical average of 13.2. While goeasy stock offers value, the momentum in its business will likely sustain.
The company expects higher loan originations to drive its consumer loan portfolio and revenue. Moreover, its solid credit quality, stable provisions for credit losses, and focus on cost savings will cushion its bottom line. Besides capital gains, investors will also benefit from goeasy’s stellar dividend payments.
Shopify
Trading at a forward enterprise value-to-sales (EV-to-sales) multiple of 9.1, Shopify (TSX:SHOP) stock is too cheap to ignore. This technology stock witnessed a sharp correction due to a slowdown in its growth rate and macro headwinds. However, this large-cap company is well positioned to benefit from the transition toward multi-channel selling models with its innovative products like Capital, Payments, and Markets.
Besides secular sector tailwinds, Shopify’s growing market share in the U.S. retail and increased of its Payment offerings (both digital and offline) augur well for growth. Further, the increased number of merchants accepting its Capital offerings and the expansion of its Markets offerings to about 200 countries will likely accelerate its growth.
Furthermore, Shopify’s focus on adding more sales marketing channels to its platform through partnerships with top social media companies will likely drive its merchant base.
Overall, Shopify’s solid growth potential and dirt-cheap valuation make it an attractive investment at the current levels.
Cargojet
Shares of Canada’s leading air cargo company Cargojet (TSX:CJT) could be a solid addition to your portfolio near the current levels. Cargojet stock witnessed a pullback due to the pressure on consumer spending that negatively impacted its volumes. Thanks to this pullback, Cargojet stock is trading at the next 12-month price-to-earnings multiple of 19.2 — much lower than its historical average of 35.9, providing an excellent buying opportunity.
While Cargojet faces short-term headwinds, its fundamentals remain strong. Its long-term contracts backed by minimum revenue guarantee and cost pass-through provisions bode well for growth. Also, its ability to retain all of its customers and next-day delivery capabilities in the Canadian market provides it with a competitive edge over its peers.
Cargojet is poised to benefit from its strategic partnerships with the largest logistics brands. Also, its focus on network and fleet optimization, growing e-commerce penetration, international growth opportunities, and leadership position in the domestic overnight market will likely support its growth and drive its stock price.
