Despite the macro headwinds, the broader economy displayed impressive resilience over the past year, alleviating fears of recession and lifting the equity market higher. Further, the moderation in the inflation rate and an expected reduction in the key lending interest rate led to a rebound in several Canadian stocks. However, several fundamentally strong stocks continue to offer significant value near the current price levels, presenting an excellent buying opportunity.
So, if you have $5,000 to invest, here are three TSX value stocks to buy and hold for years.
Lightspeed
Lightspeed (TSX: LSPD) stock dropped significantly following management’s cautious near-term outlook. This technology company provides a cloud-based commerce platform and remains cautious due to the uncertain macroeconomic environment and the pace of Unified Payments adoption in international markets. Further, its gross transaction value (GTV) remains historically weak in the fourth quarter. All these factors weighed on its share price, which is down about 32% year to date.
Thanks to the recent sell-off, Lightspeed stock is trading at the next 12-month enterprise value-to-sales (EV/sales) multiple of 1.4, which is much lower than its historical average and is near the all-time low. While Lightspeed stock has taken a hit, its fundamentals remain strong, reflected through the ongoing strength in organic sales, higher average revenue per user (ARPU), and the company’s focus on reducing costs and delivering sustainable profitability in the long term.
The company will likely benefit from the ongoing digital shift, its growing high GTV customer base, improvement in ARPU, and lower churn rate. Further, its strategic acquisitions will likely expand its customer base, strengthen its competitive positioning, and accelerate its growth rate. Overall, Lightspeed’s low valuation and solid growth prospects make it a compelling stock near the current price levels.
WELL Health
Shares of the digital healthcare company WELL Health Technologies (TSX: WELL) could be another solid addition near the current levels. The stock is trading at a forward EV/sales multiple of 1.5, which is near the all-time low and significantly lower than its historical average. While the stock is trading cheap, it continues to produce solid financial results, which supports its bull case.
Notably, WELL Health is on track to deliver the 20th consecutive quarter of record quarterly revenue. Further, the company expects to deliver positive earnings per share (EPS) in the fourth quarter (Q4). The ongoing strength in its business is led by higher patient visits.
Higher omnichannel patient visits will likely drive its organic sales. Further, its acquisitions will support its growth. Additionally, the company’s focus on improving profitability and investments in artificial intelligence technology provides a solid foundation for future growth.
Loblaw
Loblaw (TSX: L) is another top stock offering significant value near the current market price. It is Canada’s largest food and pharmacy retailer, operates a low-risk and defensive business, and consistently delivers strong revenue and earnings growth.
While its stock remains less volatile and delivers above-average capital gains (five-year compound annual growth rate of about 17%), it is trading at a next 12-month price-to-earnings multiple of 16, which is lower than its historical average.
This Canadian retailer will likely benefit from its broad product offerings, value pricing through its discount stores, growing penetration of private-label food products, and focus on optimizing its retail network. Further, Loblaw could continue to enhance its shareholders’ value through higher dividend payments. Overall, Loblaw offers a solid combination of stability, value, and income.
