Investing stocks near their lows can lead to profit. However, it’s important to note that this strategy isn’t foolproof. Stocks can trade low for legitimate reasons. Therefore, it’s wise for investors to focus on buying TSX stocks that are fundamentally strong and trading near their lows. These stocks have a better chance of rebounding strongly and generating substantial returns. The goal is to identify undervalued Canadian stocks with strong potential for growth.
Against this backdrop, let’s explore three TSX stocks trading near their lows that I would consider buying right now for long-term growth. These stocks have significant potential for future growth, making them compelling investments for investors looking to build wealth over time.
Lightspeed Commerce
Shares of Lightspeed Commerce (TSX: LSPD) could be an attractive investment option near the current levels. The company, which provides a platform for digital payments and omnichannel commerce, has seen its stock fall by around 38.8% this year and is trading near its 52-week low. Furthermore, its forward enterprise value-to-sales (EV/sales) ratio stands at 1.1, which is close to an all-time low.
This drop in Lightspeed stock reflects a slowdown in consumer spending due to broader economic challenges. While shares of this technology company are trading extremely cheaply, the company’s core business remains strong. It continues to post solid revenue growth and is moving toward sustainable profitability.
Lightspeed is well-positioned to benefit from the growing shift toward multi-channel selling platforms. Moreover, as businesses increasingly upgrade their payment systems, demand for Lightspeed’s products is expected to rise. Additionally, the company’s focus on attracting high-value customers will likely boost its average revenue per user (ARPU) and strengthen customer retention.
Lightspeed’s efforts to drive revenue, enhance margins and ARPU, cut costs, and achieve profitability could lead to a solid rebound in its share price.
Ballard Power Systems
Ballard Power Systems (TSX: BLDP) is another TSX stock that investors could consider. While the company has strong long-term prospects, its shares have taken a hit, dropping about 54% this year and over 89% in the past three years.
Ballard Power, which provides innovative proton exchange membrane (PEM) fuel cells, has witnessed a slower adoption of hydrogen and fuel cell technology, which has significantly impacted its stock. It is currently trading near its 52-week low. Additionally, the company is still unprofitable, reporting substantial losses and burning cash. Its order book remains unpredictable and continues to weigh on its performance.
Despite these challenges, Ballard Power’s long-term potential remains strong due to the ongoing shift towards low-carbon energy sources. Further, the company’s focus on innovation, the launch of new products, and product cost-reduction measures will likely strengthen its financial position and help it recover from recent setbacks. Furthermore, Ballard Power is investing in advanced manufacturing capabilities and maintains a strong balance sheet, which augurs well for future growth.
Enghouse Systems
Enghouse Systems (TSX: ENGH) stock is down over 15% this year and is currently trading near its 52-week low. However, the company’s fundamentals remain strong, which makes it a buy.
Enghouse, a software and services company, stands to benefit from its strategic acquisitions, which play a key role in driving its profitability. Recently, it acquired Mediasite, expanding its video technology into the education and event sectors while increasing its presence in Japan. Additionally, Enghouse acquired most of the assets of SeaChange International, boosting its IPTV business, enhancing its product lineup, and expanding further into the European market.
Another promising growth area for Enghouse is enterprise mobile device management.
With a strong global market presence, expanding product offerings, ongoing acquisitions, and a focus on cutting costs, Enghouse is positioned to grow its profits and deliver positive returns. These efforts are expected to drive higher cash flows, which will help fund further acquisitions and support increased dividends for shareholders.
