The equity market rebounded strongly since the beginning of the year. The easing of inflation and expected stabilization in interest rates lifted investors’ sentiment. In addition, the economy has fared better than many forecasted, which has supported the recovery in stocks.
While several TSX stocks witnessed stellar growth, a few high-quality Canadian stocks with fundamentally strong businesses didn’t participate in the recovery rally and are trading at a significantly lower valuation, signalling a buying opportunity near the current levels.
Against this backdrop, here are four Canadian stocks that are compelling investments near the current levels.
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WELL Health
Trading at the next 12-month (NTM) enterprise value-to-sales (EV/sales) multiple of 1.9, shares of the digital healthcare company WELL Health (TSX: WELL) are too cheap to ignore. WELL Health witnessed a recovery in its share price, led by its back-to-back strong financial performances. Despite the recent rally, WELL Health stock trades at a significantly discounted value from its historical average, providing a solid entry point near the current levels.
While this tech stock is trading cheap, an increase in omnichannel patient visits and ongoing strength in the high-margin virtual services business provide a solid platform for growth. Also, its focus on accretive acquisitions, investments in artificial intelligence, and its ability to generate sustainable profit augur well for growth.
Lightspeed
Like WELL Health, Lightspeed (TSX: LSPD) is another compelling stock on the valuation front. Shares of this commerce-enabling company are trading at an NTM EV/sales ratio of two, which is way below its pre-COVID level of 18. Lightspeed stock is offering significant value near the current levels. Further, it continues to deliver strong sales, driven by the ongoing shift towards omnichannel selling platforms that drive demand for its payment offerings.
Lightspeed is also streamlining its operations and focusing on high-value customers, which will enhance its average revenue per user, reduce churn, and drive its multiple-module adoption. Also, its ability to acquire and integrate companies will likely expand its customer locations, support product development, and accelerate growth.
goeasy
From technology, let’s move toward the financial services company goeasy (TSX: GSY). The stock witnessed a pullback due to macro concerns. However, macro headwinds failed to have any impact on its performance. goeasy continues to grow rapidly, led by higher loan originations, steady credit performance, and operating leverage.
goeasy stock is trading at an NTM price-to-earnings multiple of 9.4, which is lower than its historical average of 12. Moreover, it offers a solid double-digit EPS (earnings-per-share) growth, making its stock an attractive investment near the current levels. Also, goeasy consistently increases its dividend and is a Dividend Aristocrat, making it a reliable income stock. Overall, goeasy offers high growth, regular income, and solid value near the current levels.
Brookfield Renewable Partners
Shares of the clean energy company Brookfield Renewable Partners (TSX: BEP.UN) are the final stock on this list. The increased adoption of renewable energy sources, growing focus on energy security, and favourable policy support make green energy a compelling investment avenue.
Brookfield, with its highly diversified green energy assets, installed capacity of 31,600 megawatts, and robust development pipeline, is a top investment in this space. The company is expected to benefit from its highly contracted portfolio and long-term power-purchase agreements that add visibility over its future cash flows. Further, its low-cost infrastructure will cushion margin and support earnings growth. The stock has witnessed a pullback, offering a good entry point near the current levels.
