The S&P/TSX Composite Index, the benchmark index for the Canadian stock market, is up by 3.2% year to date, near its new all-time high. This is an exciting time for people who are fully invested, but these conditions can become frustrating for investors who have more cash to put to work. When share prices across the board are the highest they have ever been, it is difficult for investors to find good deals.
While the broader market might be near its all-time high, not every stock trades at such high levels. If you look carefully, there are several stocks with the potential to drive growth that lag behind the rest of the market.
The tough part is finding bargains among stocks lagging due to reasonable factors. I will discuss three TSX stocks left behind by the bull market that can deliver substantial returns to investors.
Cargojet
Cargojet Inc. (TSX:CJT) is a $1.8 billion market cap Canadian company offering time-sensitive overnight air cargo services to prominent cities within Canada and other countries. While the broader airline industry plummeted amid the pandemic, Cargojet saw demand grow due to the increased popularity of the ecommerce space.
More recently, higher inflation and an overall challenging macro environment have weighed on the company’s financials, dragging its share price down.
As of this writing, CJT stock trades for $109.08 per share, down by 5.2% year to date. The company has shifted its focus from growth to operational efficiency. These initiatives are expected to improve its margins and financials in the coming quarters, but near-term weakness should not be surprising.
Lightspeed Commerce
Lightspeed Commerce Inc. (TSX:LSPD) is a $3 billion market capitalization giant in the Canadian tech space. The omnichannel commerce solutions provider headquartered in Montreal trades for $19.26 per share, down by a massive 25.8% year to date.
Lightspeed Commerce posted solid third-quarter earnings. Despite its impressive performance, declining consumer spending and the unpredictability of unified payments adoption in international markets have caused short-term issues for the stock’s share prices.
As the adoption of unified payments grows and more small- and medium-sized businesses adopt omnichannel selling models, Lightspeed Commerce can be an excellent stock to buy at these levels.
Shopify Inc.
Shopify Inc. (TSX:SHOP) became one of the fastest-growing stocks when it debuted almost half a decade ago on the TSX, rapidly overtaking the Royal Bank of Canada as the TSX stock with the highest market cap. However, share prices declined rapidly when the tech bubble burst and valuations came crashing down across the board.
As of this writing, Shopify stock trades for $102.86 per share. While it is up by 4.5% year to date, it is down by over 51% from its November 2021 all-time high.
The $131.1 billion market cap ecommerce company is a solid business. Shares of the stock have delivered a return of about 304% in the last five years.
The company’s ability to generate durable revenue even during challenging macro environments make it an appealing holding. As more active merchants join the platform and it charges higher subscription fees, the stock offers plenty of long-term upside to its investors.
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Foolish takeaway
While trading below their all-time highs, these stocks can potentially deliver substantial returns to investors after recovering. However, it is important to understand that there are no guarantees of that happening.
Depending on changes in macroeconomic factors, there is always a risk of further downturns with even the most reliable TSX stocks. That said, these three TSX stocks look well-positioned to post significant recoveries in the long run and grow shareholder value from current levels.
