TSX stock market volatility has returned in August, which can be a great opportunity for patient and thoughtful investors. The market overheated during the spring and early summer months.
Yet, the recent pullback has put stocks in a more reasonable valuation range. Certain high-quality stocks have temporarily corrected, which can be a great opportunity for long-term investors. Here are three TSX stocks that look like excellent buys right now.
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A TSX stock for the long haul
Canadian Pacific Kansas City (TSX: CP) stock is down 6.5% in the past month. Right now, the company is faced with an impending strike that could lead to a temporary shutdown of its Canadian network. The market doesn’t like that uncertainty.
Fortunately, investors can use this as an opportunity. Management has telegraphed that it has widely prepared for this event. Likewise, it is in all parties’ best interests (including the Canadian government) to find a quick solution.
CPKC has one of the best rail networks in North America. It also has one of the best management teams who have unlocked considerable long-term value for shareholders.
It is not the cheapest railroad to buy. However, it likely has the largest amount of growth potential given its North America-wide network. If you can look through some near-term worries, this TSX stock could pay off for the long term.
A TSX stock for value and growth
Another TSX stock to buy in August is Calian Group (TSX: CGY). Investors will need to be brave because this stock has been a falling knife.
It is down 19% since the start of the year. It fell 13% after it announced its third quarter earnings. The Canadian military who is a major customer has drastically reduced its 2024 budget. That is a concern, but management believes it is temporary.
Calian still delivered solid results in the quarter. Revenues were up 11%. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was up 38%. Year to date, adjusted EBITDA is up 38%, and operating cash flow is up 23%.
These results are after growing revenues and EBITDA by a respective 17% and 25% compounded annual growth rate (CAGR) over the past five years. Calian is trading at its lowest valuation in five years.
If management can continue to hit its acquisition and organic growth targets ($1 billion of revenue by 2026), this TSX stock could be significantly higher in the years ahead.
A top financial stock in Canada
goeasy (TSX: GSY) is another TSX stock to look at adding right now. Its stock is down 7% since the start of August. Despite the weak stock momentum, this company is on a roll. In its recent second quarter, loans grew 37%, revenue increased 25%, and diluted earnings per share rose 25%.
The company is seeing very strong demand for its non-prime lending products, so much so that goeasy increased its three-year forecast.
goeasy has expanded into vehicle loans, home equity lines of credit, recreational vehicles, and vendor financing. It also has plans to build out a credit card product. However, current demand has been so strong that it doesn’t have any rapid need to expand its product categories.
goeasy has delivered exceptional long-term returns. Its stock is up 247% in the past five years. It also pays an attractive and quickly growing dividend.
If it can continue to deliver its solid growth rate, shareholders will continue to do very well. Its price-to-earnings ratio of nine times is still very attractive at today’s price.
