The ongoing macroeconomic weakness is continuing to take a toll on stock investors’ sentiments in 2023. This weakness has led to a nearly 8% decline in the TSX Composite benchmark in the last three months. While rapidly rising interest rates and high inflation are driving Canadian growth stocks lower, many of them still have a strong long-term fundamental outlook, which could help them recover fast in 2024 and beyond.
In this article, I’ll highlight two such beaten-down Canadian stocks that I find really attractive to buy now and hold for years to come to get outstanding returns on investments.
Bombardier stock
Bombardier (TSX:BBD.B) stock has witnessed nearly 22% value erosion in the ongoing year so far. At the time of writing, the shares of this Dorval-headquartered business jet maker were trading at $40.88 per share with a market cap of $4.1 billion.
Although Bombardier is yet to announce its third-quarter financial results, its total revenue in the first two quarters of 2023 went up by about 12% YoY (year over year) to US$3.1 billion as the company continued to focus on higher aircraft deliveries. Also, the company posted adjusted earnings of US$1.78 per share in the first half of the year compared to its adjusted net loss of US$1.23 per share in the first half of 2022, reflecting its improving financial condition despite economic uncertainties.
With this, Bombardier’s bottom line has been beating Street analysts’ bottom-line expectations for 10 quarters in a row, making its financial growth trends look stellar. As the company plans to increase its aircraft deliveries and production over the coming years, you can expect its financial growth to improve further. These fundamental factors make this Canadian stock look highly undervalued after its recent big declines.
Lightspeed stock
Lightspeed Commerce (TSX:LSPD) is another top Canadian growth stock that has been struggling for the last few years. To give you an idea about that, LSPD stock has tanked by more than 60% over the last three years to currently trade at $17.85 per share with a market cap of $2.7 billion.
Just like Bombardier, Lightspeed has also managed to post huge improvements in its financial growth trends in the last year, even as economic weakness continued to soften the demand for some of its services. In the last two reported quarters (six months ended in June), the Canadian one-stop commerce solution provider’s revenue has grown positively by about 23% YoY to US$393.3 million. During the same period, its adjusted net losses have also reduced significantly on a YoY basis, reflecting Lightspeed’s ability to continue performing financially well, despite rising interest rates.
The software company recently switched to Lightspeed Payments services, which is not only allowing it to save money in fees but also making its business faster and easier to operate. Even amid unfavourable macroeconomic trends, Lightspeed’s management currently expects to post stronger revenue growth in the second half of the year, which should help it inch closer to sustainable profitability. Given these positive factors, LSPD could be a great stock to buy on the dip now and hold for the long term.
