The resilient economy, moderation in inflation, and expected stabilization in the interest rate environment has boosted the Canadian equity market. However, a few stocks continue to struggle and are trading at attractive discounts, presenting a solid buying opportunity.
While buying stocks at a discount, investors must focus on fundamentally strong companies as their share prices could recover swiftly as the operating environment improves. With this background, here are four Canadian stocks to buy at a discount.
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Aritzia
Down over 50% year to date, shares of the luxury apparel design house Aritzia (TSX: ATZ) look highly attractive near the current levels. The company is addressing concerns related to its merchandise by adding newness to its offerings. Moreover, it is expanding its footprint, focusing on growing the visibility of its brand, strengthening its e-commerce channel, and reducing costs. All these efforts will likely accelerate its growth and lead to a recovery in its share price.
The women’s fashion retailer expects to grow its revenue at an average annualized growth rate, or CAGR, of 15-17% through 2027. Moreover, it anticipates its earnings to grow faster than its sales during the same period. In summary, its low share price and double-digit sales and earnings growth support my optimistic outlook.
Lightspeed
Lightspeed (TSX: LSPD) stock is trading at an incredibly cheap valuation, way below its historical average. While its stock is trading at a discounted valuation, the cloud-based commerce platform provider continues to steadily grow its revenues. Further, the company is on track to achieve sustainable earnings, which bodes well for future growth.
The company’s focus on high gross transaction value (GTV) customers, the rollout of Unified Payments, and the integration of artificial intelligence (AI) will likely drive its average revenue per user, reduce churn, and accelerate its future growth. Moreover, its focus on strategic acquisitions will strengthen its competitive positioning, expand its customer locations, and support product development. Overall, Lightspeed stock is a solid long-term bet trading at a massive discount.
Cargojet
Cargojet (TSX: CJT) stock is down about 32% over the past year as the company is witnessing lower volumes due to the macro headwinds. Nonetheless, Cargojet’s fundamentals remain strong, getting a boost from its long-term contractual arrangements that offer minimum revenue and volume commitments. Further, its focus on improving efficiency, renewing partnerships with key customers, reducing debt, and preserving cash bode well for growth.
In summary, Cargojet’s leadership in Canada’s domestic air cargo market, long-term contracts, expansive network, and international growth opportunities will enable the company to deliver solid financials in the coming years. Moreover, the stock is trading at a forward price-to-earnings multiple of 21.1, which is lower than its historical average and provides a good entry point.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a lucrative stock to own near the current levels. Shares of this digital healthcare company are trading at an Enterprise Value/Sales multiple of 1.6, which is significantly lower than its pre-pandemic levels of 4.4. While WELL Health stock appears attractive based on the valuation, it benefits from the growing number of omnichannel patient visits.
In addition, WELL Health’s focus on accretive acquisitions, investments in AI-based products and services, and solid organic growth could provide a significant lift to its share price. Further, WELL Health’s top line is projected to reach $1 billion annually within two years, which is positive. Also, the company is profitable, which supports my bull case.
