Investing in shares of fundamentally strong companies while they are cheap could be an excellent strategy for generating significant returns. Against this backdrop, here are four absurdly cheap Canadian stocks long-term investors could buy now with $500.
Lightspeed
Speaking of absurdly cheap stocks with solid growth prospects, one could consider investing in Lightspeed (TSX: LSPD). Shares of this technology company are down about 36% year to date and are trading at the next-12-month (NTM) enterprise value to sales (EV/sales) multiple of 1.3, which is too cheap to ignore.
While Lightspeed stock trades cheaply, it is well-positioned to benefit from the ongoing digital shift. The company’s comprehensive software platform and unified suite of tools catering diverse needs of small- and medium-sized businesses, which will likely drive demand for its offerings.
In addition to benefiting from secular tailwinds like digital shift, Lightspeed is set to gain from its growing base of high gross transaction volume (GTV) customers. These customers, who use multiple company modules, have a lower churn risk and contribute significantly to the company’s average revenue per user (ARPU), supporting sustainable earnings in the long term.
Well Health
Shares of the digital healthcare company WELL Health Technologies (TSX: WELL) is another top stock that is trading absurdly cheap. For instance, WELL Health stock is trading at an NTM EV/sales ratio of 1.4, which reflects a discount of over 80% from its historical average. While shares of this digital healthcare company are trading cheaply, it continues to generate solid sales and is focusing on profitable growth.
The company’s omnichannel business model, predictable revenue base, growing patient visits, and comprehensive cost-cutting program will likely drive its top and bottom lines. In addition, WELL Health’s accretive acquisitions and focus on strengthening its position in artificial intelligence (AI)-powered preventative care augur well for long-term growth.
Shopify
Shopify (TSX: SHOP) stock has lost more than 22% of its value year to date on fears of a slowdown in e-commerce. Barring short-term concerns, Shopify’s fundamentals remain strong, and the company is well-positioned to gain from the shift in selling models toward multi-channel platforms.
Shopify’s multi-channel sales platform, diverse offerings such as payment processing and shipping solutions, and focus on adding new merchant features and incorporating artificial intelligence (AI) in its products bode well for growth. Further, its cost-reduction initiatives and focus on delivering sustainable profit are positives.
Ballard Power Systems
The final stock on this list is Ballard Power Systems (TSX: BLDP). The stock is down about 31% in one year, reflecting the widening losses and softness in its order book due to macro uncertainty. Nonetheless, the long-term prospects of Ballard Power System remain solid, as its products have applications in electric buses, battery-electric vehicles, and trucks. This implies that Ballard Power will likely benefit from vehicle electrification.
The company develops proton exchange membrane fuel cell products and is poised to benefit from the growing adoption of zero-emission products. Moreover, its focus on new product launches, growing customer base, expansion of manufacturing capacity, and cost-reduction initiatives will likely drive its financials and share price.
