Investing in shares of Canadian companies trading cheap or at attractive valuations can be a solid strategy for generating significant returns and building wealth over time. Even as the TSX demonstrates resilience in the face of macroeconomic uncertainties and continues its upward trend, a few fundamentally sound stocks are still trading at attractive prices. These stocks present an excellent buying opportunity.
Against this backdrop, here are two Canadian stocks you’ll be glad you bought at these prices. These stocks have significant growth potential, making them worthy additions to any investor’s portfolio.
Lightspeed Commerce
Shares of Lightspeed Commerce (TSX: LSPD) appear to be an attractive investment option near the current levels. The company, which offers a platform that facilitates digital payments and omnichannel commerce, has seen a significant drop in its share price, with the stock down about 38% year to date. This decline reflects concerns over a potential slowdown in growth rate as macroeconomic headwinds weigh on consumer discretionary spending.
Currently, Lightspeed stock is trading near its 52-week low, and its forward enterprise value-to-sales (EV/sales) ratio stands at 1.1, which is close to an all-time low. While shares of this technology company are trading extremely cheaply, its fundamentals remain solid, reflected through steady growth in both revenue and average revenue per user (ARPU). This combination of solid growth and low valuation makes Lightspeed stock a compelling buy near its current market price.
The momentum in Lightspeed’s business will likely be sustained due to the ongoing shift toward multi-channel selling platforms. Moreover, as businesses increasingly invest in technology to upgrade their payment systems, the demand for Lightspeed’s products will likely rise.
Lightspeed will likely benefit from its focus on growing its high-value customers, which will boost its ARPU, increase customer retention, and drive margins. The company’s efforts to cut costs and achieve profitability are positive steps and will likely support the recovery in its share price.
goeasy
Shares of Canada’s leading subprime lender, goeasy (TSX: GSY), are screaming buy near the current market price. The company continues to deliver stellar revenue and earnings despite macro uncertainty. For instance, goeasy’s loan originations jumped 24% year over year in the second quarter (Q2) of 2024. Moreover, its top and bottom lines increased by 25%.
What stands out is that goeasy continued to witness stable credit and payment performance, which shows its excellent credit underwriting capabilities. Further, the company’s allowance for future credit losses decreased slightly to 7.31% in Q2 compared to 7.38% in Q1.
It’s worth noting that goeasy’s revenue has grown at a compound annual growth rate (CAGR) of 20.2% in the last five years (as of June 30, 2024). Its earnings per share (EPS) grew at a CAGR of 28.1% during the same period.
Thanks to its solid financials, goeasy stock is up about 42% over the past year. Moreover, it has gained over 273% in five years. Despite this considerable increase in value, goeasy stock trades at the next 12-month (NTM) price-to-earnings (P/E) multiple of 9.8, which is low considering its double-digit earnings growth rate and over 2.5% dividend yield.
Looking ahead, higher loan originations and strength in unsecured lending and automotive financing will drive its consumer loan portfolio and revenue at a solid double-digit rate. Moreover, its bottom line could continue to increase faster than revenues, reflecting steady payments and credit performance, and productivity savings.
In summary, goeasy is well-positioned to deliver solid capital gains and dependable dividend income, driven by its solid financials. Further, its stock is undervalued near the current market price, providing a solid opportunity to buy now.
