The Canadian stock market is riding yet another 5% run. After coming out of the gates flying in 2023, the S&P/TSX Composite Index surged close to 7% in January but quickly returned most of those gains. That nearly 7% selloff has since been followed by yet again another 5% gain over the past month.
Volatility has been a key theme for investors over the past year, as the Canadian stock market has worked to return to all-time highs. The lows have been getting higher over the past 12 months, so there are reasons for bulls to be optimistic.
As the market continues to run towards new highs, there are still plenty of top TSX stocks trading at opportunistic discounts.
Here are three beaten-down companies that I’ve got at the top of my own watch list right now.
Northland Power
Now is an excellent time for long-investors to buy up renewable energy stocks. After a huge run-up following the COVID-19 market crash, the sector has been on the decline since early 2021. As a result, there’s no shortage of discounted green energy stocks on the TSX right now.
At an $8 billion market cap, Northland Power (TSX: NPI) is a steady market beater that can also provide passive income. Even with shares down more than 30% since early 2021, the energy stock has still largely outpaced the returns of the S&P/TSX Composite Index over the past five years.
And that’s not even including the company’s dividend, either. At today’s stock price, the dividend is yielding an impressive 3.5%.
Air Canada
After dropping close to $10 a share in March 2020, Air Canada (TSX: AC) has struggled to return to pre-pandemic prices. The airline stock managed to end 2020 with a market-beating quarter but has not yet been able to return to all-time highs that were set in early 2021.
Today, shares are down 20% over the past year and close to 30% over the past five years.
Airline stocks aren’t typically known for driving market-beating returns. But prior to the pandemic, Air Canada had been an exception to that. In the decade leading up to the COVID-19 market crash in early 2020, Air Canada had managed to deliver multi-bagger returns to its shareholders.
Investors may need to be patient with this pick while Air Canada recovers from the massive hit it the airline industry took in 2020. Demand for air travel will slowly return to pre-pandemic levels, and I’m banking on Air Canada’s market-beating returns to soon follow.
Lightspeed Commerce
Last on my list is a beaten-down tech stock that’s been on a wild ride ever since it went public in 2019.
At one point in 2021, shares of Lightspeed Commerce (TSX: LSPD) were up more than 700% from its initial public offering price. Since then, the tech stock has given up all of those gains and is trading at just about the same price that it joined the TSX at.
Alongside many other high-growth tech stocks, shares of Lightspeed surged in 2021 and then came crashing down the following year.
Volatility of the stock aside, the business of Lightspeed remains in an excellent position to be a long-term winner. Management remains focused on growing both the product line and international presence, which explains why quarterly revenue growth continues to come in at double-digit numbers.
Investors looking to add some serious growth to their portfolios should consider taking advantage of this fire-sale price.
