The Canadian equity market remained resilient, despite the macro uncertainty. Moreover, easing inflation supported the recovery in stocks. While most TSX stocks appreciated, shares of several fundamentally strong companies continue to struggle despite consistently delivering solid financial performance. This presents an opportunity to buy these Canadian stocks at a discount and capitalize on the recovery in their price.
Against this background, let’s look at five stocks that one can buy at a discount.
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Lightspeed
Shares of Lightspeed (TSX: LSPD) are trading incredibly cheap, despite the company performing well and heading toward profitability. The company offers a cloud-based commerce platform and remains and remains well positioned to benefit from the ongoing shift in selling models toward omnichannel platforms.
The company enables businesses to accept payments, engage with customers, and manage their operations. Thus, it is poised to gain from the increased spending by retailers and restaurateurs on the modernization of their legacy payments and expansion to newer locations. Lightspeed targets large customers with a high gross transaction value, driving its average revenue per user and reducing churn. Further, its focus on streamlining its operations will help achieve profitability soon and support the recovery in its price.
Aritzia
Aritzia (TSX: ATZ) stock has dropped over 48% year to date due to near-term pressure on its margins. This presents a good buying opportunity for long-term investors. Aritzia’s net revenue grew at a CAGR (compound annual growth rate) of 26% from fiscal 2019 to fiscal 2023. Moreover, the company expects momentum to sustain and projects 15-17% yearly growth in its top line during the same period.
Its focus on boutique expansion, growing footprint in the U.S., and driving brand awareness augur well for growth. Further, Aritzia’s new store economics remain highly attractive with a low average payback period. Overall, Aritzia is well positioned to outperform the broader markets in the coming years.
Cargojet
Cargojet (TSX: CJT) is another top stock to buy near the current levels. Shares of Canada’s largest air cargo company are down over 16% year to date. The company is poised to deliver solid financial performance on the back of its strategic partnerships with top logistics companies. The company’s partnerships with these companies enable it to grow its revenues steadily and are earnings accretive.
Furthermore, the company’s long-term customer contracts with minimum revenue guarantees, cost pass-through provisions, and a high retention rate adds stability to its business. Also, Cargojet focuses on fleet optimization and strengthening its Aircraft, Crew, Maintenance, and Insurance segment. In addition, its next-day delivery capability to most Canadian households positions it well to capitalize on e-commerce demand.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX: BEP.UN) stock is down over 26% over the past year. Nonetheless, this pure-play clean energy company will likely benefit from its increased adoption of renewable energy sources, favourable policy support, and the large installed capacity of 31,600 megawatts.
Looking ahead, its long-term power-purchase agreements with protection against inflation will add stability to its cash flows. Moreover, its low-cost infrastructure will cushion margins, drive earnings, and support its dividend payouts.
Docebo
The final stock on this list is Docebo (TSX: DCBO). It provides a cloud-based platform for enterprise learning platform and consistently delivers solid recurring revenues, reflecting its growing customer base and higher revenue from users.
The company is on track to achieve profitability soon, led by an increase in the number of customers adopting multi-year contracts and strength in its subscription revenue. Also, its focus on expanding its generative artificial intelligence capabilities and strategic acquisitions will strengthen its competitive positioning and drive its financials and stock price.
