Despite fears, the economy displayed impressive resilience this year, providing a significant uplift to the equity market. Further, the moderation in the inflation rate led to a rebound in several Canadian stocks year to date. However, several fundamentally strong stocks continue to trade cheap, presenting an excellent buying opportunity near the current levels.
With this backdrop, let’s explore three cheap TSX stocks I’d buy before the market heats up.
goeasy
Shares of Canada’s leading non-prime consumer lending company, goeasy (TSX: GSY) are too cheap to ignore near the current levels. The stock is trading at the next 12-month price-to-earnings multiple of 8.1. While goeasy stock is trading cheaper than its historical valuation, it continues to grow its top and bottom line at a double-digit rate, which makes it attractive. Further, goeasy also offers a healthy dividend yield of over 3% (based on its closing price of $120.03 on November 3), which supports my bullish outlook on the stock.
It’s worth highlighting that goeasy’s revenue grew at a CAGR (compound annual growth rate) of 19.44% in the last five years (as of June 30, 2023). What’s more impressive is that its EPS (earnings per share) sports a CAGR of 31.91% during the same period.
goeasy is experiencing healthy product demand, including unsecured lending, automotive financing, and home equity loans. This indicates that the company’s loan portfolio could continue to expand, providing a lift to its top line. Further, a large subprime lending market will likely support its growth. Higher sales, stable credit performance of the loan book, and improvement in operating leverage will boost its operating income and EPS. Moreover, goeasy is well positioned to enhance its shareholders’ value through higher dividend payments in the coming years.
Lightspeed
Next is Lightspeed (TSX: LSPD) stock. It’s worth noting that the company provides a cloud-based commerce platform and offers point-of-sale (POS) solutions. Despite consistently delivering healthy sales growth, Lightspeed stock has underperformed this year. Meanwhile, its stock is trading at an extremely low valuation. This presents a compelling opportunity to buy its shares near the current levels.
Notably, Lightspeed stock is trading at a forward enterprise value-to-sales (EV/sales) multiple of 1.5, which is near an all-time low. Furthermore, the company is growing revenue rapidly while focusing on reducing its costs, which is positive.
Overall, its focus on two flagship products, the rollout of Unified Payments and the integration of AI (artificial intelligence), will drive its customer base and accelerate its growth. Further, its focus on acquiring and quickly integrating companies will strengthen its competitive positioning and support its financials and stock price.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is another cheap stock to buy right now. Trading at an EV/sales multiple of 1.6, WELL stock looks attractive. While WELL Health stock trades cheaply, the company generates record revenue.
The digital healthcare company benefits from the growing number of patient visits on its platform. Further, its focus on accretive acquisitions and generating profitable growth bode well for long-term growth. WELL Health has also launched several key initiatives related to AI, such as WELL AI Voice and WELL AI Investment Program, which provide solid growth opportunities ahead.
Notably, the solid organic growth, investments in AI-based products and services, and accretive acquisitions will enable WELL Health to deliver substantial growth. The company aims to surpass $1 billion in annual revenue within two years, which is positive and supports my bullish view about its stock.
