The TSX has been on a tear this year, gaining 15% year to date. Despite the rally in most Canadian stocks, a few fundamentally strong companies are still trading cheap and look undervalued at today’s prices.
Let’s take a look at two undervalued TSX stocks that seem like screaming buys this October.
WELL Health stock
Investors searching for deals should consider digital healthcare company WELL Health (TSX:WELL). Shares of this leading digital healthcare company are trading at the next 12-month (NTM) enterprise value-to-sales (EV/Sales) multiple of just 1.4 — close to a multi-year low.
Even though its stock is trading cheap, WELL Health continues to deliver impressive financial results and solid growth. Further, its focus on expanding its artificial intelligence (AI) capabilities positions it well for long-term growth.
WELL Health has consistently delivered record revenue, driven by a combination of higher organic sales and strategic acquisitions. Further, its Canadian clinic transformation program, aimed at improving operational efficiency across its clinic network, has been a major growth catalyst. This initiative boosts productivity and enhances organic growth within its healthcare operations.
The company is also focusing on optimizing costs and integrating digital workflows. The launch of advanced AI tools — such as the ambient AI scribe and several co-pilot technologies — is expected to accelerate growth. These innovations should improve operational efficiency and give the company a competitive edge.
WELL Health is also reducing its debt and investing in high-growth opportunities. In the second quarter, it paid $14 million in debt and reduced its leverage ratio to 2.67x for bank debt and 3.45x for all debt. It continues to strengthen its Canadian clinic business through acquisitions as the segment continues to perform well and has significant room for growth.
In summary, WELL Health’s attractive valuation, solid growth trajectory, and strategic investments in AI-powered products make it a compelling long-term investment choice.
Lightspeed stock
Lightspeed (TSX:LSPD) should be on your radar if you are looking to buy undervalued stocks. This leading provider of cloud-based commerce platforms has underperformed the market this year, largely because of macroeconomic uncertainties and pressure on consumer spending. However, the recent slump in the stock price presents an attractive buying opportunity.
Currently, Lightspeed stock is trading at an NTM enterprise value-to-sales (EV/Sales) ratio of just 1.6. This multiple is significantly lower than its historical average, signaling that the stock is undervalued. For investors, this dip offers a potential entry point into a company well-positioned to benefit from the ongoing shift toward omnichannel selling models.
Despite macro challenges, Lightspeed’s revenue continues to grow at a healthy rate, driven by increased adoption of its unified payment and point-of-sale (POS) solutions. And as businesses continue to transition toward multi-channel selling models and modernize their payment systems, Lightspeed is expected to see higher demand for its products.
The technology company’s emphasis on growing its high Gross Transaction Volume (GTV) customer base augurs well for growth. These larger customers are more likely to adopt its multiple modules, thus driving retention, average revenue per user (ARPU), and margins.
Lightspeed is also focused on turning profitable and achieving sustainable earnings by cutting losses and improving efficiency.
With a growing revenue base, increased payment penetration, and cost-efficiency initiatives, Lightspeed is poised to deliver solid growth in the upcoming years. Its currently low valuation supports a bull case for investing in the stock today.
