While the S&P/TSX Composite Index’s movement has been choppy this year, the Canadian benchmark index is down by just 4.3% from its all-time high as of this writing. With the ongoing volatility in the market, several top names across the board are still trading for highly discounted prices.
Many high-flying growth stocks that nosedived a few years ago still have room to recover to their all-time highs.
Since there is no way to predict what the next few months hold for the stock market, many investors are worried about allocating capital to the stock market. Instead of worrying while waiting on the sidelines to see what happens, it can be a good time to research undervalued stocks with long-term growth potential.
If you have a well-balanced portfolio and higher risk tolerance, look closely at these two beaten-down stocks for possible assets you can buy at discounted prices.
goeasy
goeasy Ltd. (TSX: GSY) is a $1.8 billion market capitalization alternative financial services company. Headquartered in Mississauga, it lends money to borrowers who cannot secure loans through traditional lenders.
From unsecured installment loans to offering merchandise leasing for various goods under easy leasing agreements, goeasy operates three reportable business segments: easyhome, easyfinancial, and LendCare.
Like the broader market, shares of goeasy soared through most of 2021. Since then, things have mainly gone downhill for the alternative financial services company. As of this writing, goeasy stock trades for $108.91 per share, down by 24.5% from its 52-week high and almost 50% from its 2021 all-time high.
At under $110 per share, the analyst consensus 12-month price target suggests that goeasy stock trades at a 32% discount. At current levels, it offers shareholders a 3.53% dividend yield.
Lightspeed Commerce
Lightspeed Commerce Inc. (TSX: LSPD) is one of the many high-flying names from the tech sector that suffered heavy losses amid the market meltdowns. As of this writing, Lightspeed stock trades for $19.65 per share, a far cry from its September 2021 levels. Down by almost 90% from its all-time highs, shares of Lightspeed are closer to their price when the company went public in 2019 than its peak.
While the drastic slash in its share prices from less than two years ago is alarming, the company is nowhere near being in trouble. Lightspeed reported mixed fourth-quarter earnings for fiscal 2023.
The March 31-ending quarter saw its revenue fall short of analyst expectations by around $200,000 at $182.2 million. However, it reported breakeven adjusted net income when analysts anticipated a $0.03 loss per share.
Despite all the volatility, the company closed the quarter with cash and cash equivalents of $800.2 million, putting it in a good position to continue supporting its growth initiatives. The company’s long-term growth prospects look solid as the e-commerce space and digitization grow.
Given macroeconomic uncertainty, I expect Lightspeed stock to remain volatile in the near term. However, investors with a long investment horizon can use the downturn as an opportunity to lock in the potential for stellar long-term capital gains.
Foolish takeaway
The Canadian stock market has displayed incredible resilience this year despite high interest rates and inflation plaguing the economy. For the risk-averse investor, it is a time to practice caution and carefully allocate money to investments in the market, if at all.
If you have a balanced portfolio and can tolerate near-term share price volatility, goeasy stock and Lightspeed Commerce stock can be worthwhile additions to your self-directed portfolio.
