While the broader markets are trading near record levels, several stocks across sectors are priced at a discount compared to their all-time highs. Here are three such TSX stocks that might seem risky right now but are positioned to pay off big time in the future.
Canada Goose stock
Valued at $1.6 billion by market cap, Canada Goose (TSX: GOOS) trades over 80% from all-time highs. Canada Goose designs, manufactures, and sells performance luxury apparel for men, women, and children in multiple global markets. The company derives a significant portion of its sales from China, a region wrestling with slower consumer spending.
Canada Goose’s sales increased from US$958 million in fiscal 2020 (which ended in March) to US$1.33 billion in the last 12 months. However, its operating income fell from US$187 million to US$167 million in this period.
Notably, Canada Goose has improved its free cash flow in recent quarters. In the last four quarters, its free cash flow stood at US$179 million, up from US$109 million in fiscal 2024 and US$71 million in fiscal 2023. So, priced at 6.8 times trailing free cash flow, GOOS stock is really cheap, given it is forecast to expand earnings from $0.73 per share in fiscal 2024 to $0.94 per share in 2026.
In fiscal 2025, Canada Goose expects to grow total sales in the low single digits despite a sluggish macro environment.
WildBrain stock
Valued at $260 million by market cap, WildBrain (TSX: WILD) develops, produces, and distributes films and television programs. It has two primary business segments: Content Business and Canadian Television Broadcasting.
Down 86% from all-time highs, WildBrain is struggling due to operational challenges, a weak balance sheet, and the shift toward online streaming. In fiscal 2024 (which ended in June), WildBrain saw a 13% decline in sales. However, analysts expect sales to rise by 11% to $512 million in 2025 and $557 million in 2026.
WildBrain is looking to sell non-core assets and reduce balance sheet debt, which should drive future earnings higher. Priced at 0.5 times forward sales, WILD stock is cheap and could stage a turnaround if its top-line growth translates to an improvement in earnings.
Sleep Country stock
The final TSX stock on my list is Sleep Country (TSX: ZZZ), which trades 20% below all-time highs. Despite its pullback, the stock has returned close to 180% to shareholders after adjusting for dividend reinvestments in the past decade.
Sleep Country retails mattress and bedding-related products in Canada. It pays shareholders an annual dividend of $0.95 per share, indicating a forward yield of almost 3%. These payouts have almost doubled in the last nine years, significantly enhancing the yield at cost.
In the last 12 months, Sleep Country has reported revenue of $953.6 million, up from $712 million in 2019. Analysts tracking the TSX stock expect total sales to surpass $1 billion in 2025. Moreover, the company is forecast to expand adjusted earnings from $2.12 per share in 2023 to $2.6 per share in 2025.
Priced at 13.4 times forward earnings, ZZZ stock is relatively cheap, given that adjusted earnings are forecast to expand over 20% annually through 2028.
