After four days of selling, the Canadian equity markets witnessed healthy buying yesterday, with the S&P/TSX Composite Index rising by 1.08%. There is growing hope that the Federal Reserve will cut interest rates later this month, thus improving the global economy. Investors looking for bargain stocks drove the index higher. Amid improving investors’ sentiments, investors could buy the following four beaten-down TSX stocks to earn superior returns.
Magna International
Magna International (TSX:MG) has been under pressure over the last three years, losing around 57% of its stock value compared to its 2021 highs. Supply chain issues and weakness in the EV (electric vehicles) segment have weighed on the stock, dragging its stock price and valuation down. The company trades around 0.3 and 6.7 times analysts’ projected sales and earnings for the next four quarters, which looks attractive.
Further, the EV segment offers excellent long-term growth prospects despite the near-term weakness. Fortune Business Insights projects the global EV market to grow at an annualized rate of 13.8% through 2032. Given its expertise and continued investments in powertrain electrification, battery enclosures, and active safety segments, MG could benefit from the addressable market expansion. The company has raised its dividends consistently at an annualized rate of around 10% for the previous 14 years, while its forward yield stands at 4.89%. Considering all these factors, I am bullish on MG.
Cargojet
Cargojet (TSX:CJT), which provides time-sensitive air cargo services to major North American cities, has witnessed some buying this year, with its stock price increasing by 6.4%. Despite the rise, it trades around 50% lower than its 2020 highs. Its valuation looks attractive, with its NTM (next-12-month) price-to-sales multiple at two.
Meanwhile, the demand for air cargo services is rising amid the expansion of e-commerce. Further, Cargojet recently signed a three-year agreement with a Chinese e-commerce company to operate scheduled charter services from China to Canada. The cargo airliner could earn around $160 million in revenue over the three years. Its long-term customer contracts and cost-cutting initiatives could support its financial growth. Considering all these factors, I believe Cargojet would be an excellent buy.
Lightspeed Commerce
Third on my list is Lightspeed Commerce (TSX:LSPD), which provides commerce solutions to businesses worldwide. Amid the uncertain broader market environment, the company has been under pressure this year, with its stock price falling around 40%. Its NTM (next 12 months) price-to-sales multiple has declined to 1.6, making it an attractive buy.
Meanwhile, the growing popularity of the omnichannel selling model offers a long-term growth potential for Lightspeed Commerce. The company continues adding new customers and expanding its average revenue per user. Further, its unified point of sales and payment offerings, new product launches, and customers’ transition to higher GTV (gross transaction value) locations could boost its financials in the coming quarters. It also focuses on right-sizing its cost structure and improving its efficiency to increase profitability. Considering all these factors, I am bullish on Lightspeed Commerce.
BlackBerry
BlackBerry (TSX:BB), which has exposure to high-growth sectors, such as cybersecurity and IoT (Internet of Things), would be my final pick. Amid the lower-than-expected growth in the IoT segment and growing competition in the cybersecurity segment, the company has been under pressure this year, losing around 58% of its stock value.
Meanwhile, the company recently reported impressive first-quarter performance for fiscal 2025, which ended on May 31. It outperformed management’s revenue guidance in both segments. Meanwhile, I expect the uptrend in its IoT segment to continue amid rising penetration in the automotive sector due to the growing usage of ADAS (advanced driving assistance systems) and digital cockpits. The company is also expanding its presence in the general embedded market through its QNX platform.
Further, BlackBerry continues to launch innovative artificial intelligence-powered products in the cybersecurity segment and enhance customer experience to expand its customer base and drive its financials.
