While the TSX index trades near all-time highs, several companies across sectors are attractively priced. In this article, I have identified two such TSX stocks that might be an excellent addition to the RRSP (Registered Retirement Savings Plan) in 2025.
The RRSP is a registered retirement account that helps you reduce your tax liability each year. For instance, an individual earning $100,000 annually can contribute up to $18,000 to the RRSP, reducing the taxable income to $82,000. As these investments are withdrawn in retirement, Canadian retirees should use the account to hold stocks that perform well across market cycles and build long-term wealth.
Pan American Silver Group stock
Valued at $11.6 billion by market cap, Pan American Silver (TSX:PAAS) is engaged in the exploration, mine development, extraction, processing, refining, and reclamation of silver, gold, zinc, lead, and copper mines in Canada, Mexico, Peru, Argentina, and Bolivia.
Pan American Silver acquired Yamana Gold last year, following which it controls the largest silver reserves globally. The acquisition increased Pan American’s silver production by 50% while more than doubling its gold production.
Silver is a precious metal that is essential in industrial applications, as over 50% of the demand for the commodity comes from the industrial sector. Like gold, silver is viewed as a hedge against inflation and a safe-haven metal that can weather an economic downturn.
Silver prices have gained roughly 35% year to date, making Pan American Silver a top investment to own right now. Due to rising commodity prices, analysts expect Pan American Silver’s adjusted earnings to expand from $0.16 per share in 2023 to $1.75 per share in 2025. So, priced at 18.3 times forward earnings, PAAS stock is reasonably valued.
With 11 producing mines across eight countries, Pan America’s portfolio offers scale and quality. The TSX mining stock has returned more than 60% in the last 12 months. Despite these market-beating returns, it also pays shareholders an annual dividend yield of 1.68%, given a payout of $0.54 per share.
Calian Group stock
Valued at a market cap of $566 million, Calian Group (TSX:CGY) provides business services and solutions in verticals such as health, defence, security, aerospace, engineering, and information technology in Canada, the U.S., and Europe.
In the fiscal third quarter (Q3) of 2024 (ended June), Calian Group increased sales by 11% year over year, the third-best quarter in company history in terms of revenue. Calian’s top line in fiscal Q3 was driven by the acquisition of nuclear assets from MDA. Notably, in the last three quarters, its organic growth was lower at 5%.
Calian ended Q3 with a gross margin of 33.4%, the ninth consecutive quarter above 30%. Comparatively, the higher margin contribution from acquisitions and sales growth enabled Calian to increase its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 22% to $17.7 million.
In the June quarter, Calian signed and acquired $317 million in gross new contracts, translating to a book-to-bill ratio of 1.7 times. It ended Q3 with a backlog of $1.2 billion, which provides the investors with revenue visibility.
In the last 12 months, Calian Group has reported a free cash flow of $78.9 million, up from $48.4 million in fiscal 2023. So, priced at 7.2 times trailing free cash flow, the TSX stock trades at a cheap valuation, given it also offers a tasty dividend yield of 2.3%.
