2 Cheap Canadian Stocks I'd Buy This December

2 Cheap Canadian Stocks I’d Buy This December

Value-seeking investors can consider gaining exposure to small-cap stocks such as Equinox Gold and BioSyent.

Aditya Raghunath

Aditya Raghunath joined the Motley Fool Canada team in 2019 and has close to seven years of experience in covering publicly-listed companies. With a post-graduate degree in finance, Aditya aims to educate and engage Canadians by writing extensively about growth, dividend, and value stocks. If you are considering investing in the stock market, he recommends reading The Intelligent Investor by Benjamin Graham before taking the plunge.

Published November 28, 2024 8:15 pm EST

While the stock market is hovering near all-time highs, investors can still buy and hold quality companies trading at a discount to their intrinsic value. In this article, I have identified two undervalued Canadian stocks you can buy today and generate outsized returns in 2025 and beyond. Let’s dive deeper.

Workers use a microscope to do medical research in a modern laboratory. — Source: Getty Images

BioSyent stock

BioSyent (TSXV: RX) is a specialty pharmaceutical company with a market cap of $133.6 million. It sources, acquires, develops, and sells healthcare products in Canada and other international markets. Its products include iron supplements and lubricants for various procedures, such as endoscopy and proctoscopy.

In the last 12 months, BioSyent has reported revenue of $34.5 million, an increase of 12% year over year. Its revenue has almost tripled from $12.2 million in 2014. Moreover, the company reports a consistent profit due to a healthy gross margin of 79.4% and an operating margin of 24%. A debt-free balance sheet allows BioSyent to report a free cash flow of $6.7 million in the last four quarters, indicating a margin of 19.4%.

Notably, the healthcare stock has reported positive earnings per share for 57 consecutive quarters. Analysts tracking the Canadian company project earnings to expand to $0.63 per share in 2024 and $0.9 per share in 2026, up from $0.53 per share in 2023.

BioSyent’s revenue is forecast to surpass $45 million in 2026. Given a free cash flow margin of 20%, BioSyent might end 2026 with an FCF of $9 million. Priced at 20 times forward FCF, BioSyent stock could gain 35% over the next 12 months.

BioSyent also pays shareholders an annual dividend of $0.18 per share, indicating a forward yield of 1.5%. The payout has increased by 12% in the past year. Investors can expect its dividend growth to continue as the company has a payout ratio of just 31%.

Equinox Gold stock

Valued at a market cap of $2.6 billion, Equinox Gold (TSX: EQX) is engaged in acquiring, exploring, and developing mineral properties. It explores gold and silver deposits with mining interests in Brazil, the U.S., and Mexico.

In Q3 of 2024, Equinox Gold realized US$2,461 per ounce on the 174,000 ounces it sold, bringing in US$428 million in total sales. The increase in sales was attributed to higher production and rising gold prices. The Greenstone mine, under construction last year, contributed 44,000 ounces in Q3 and will be a key driver of sales over the next 12 months.

Higher sales and a focus on cost optimization allowed Equinox to report US$101 million in income from mine operations, up from $76 million in the year-ago period.

While gold prices have rallied over 30% in 2024, the TSX stock has seen a 25% uptick in share prices this year. Higher commodity prices will allow Equinox Gold to end 2025 with an adjusted earnings per share of US$1, up from US$0.24 in 2024 and US$0.07 in 2023.

Priced at 7.8 times forward earnings, Equinox Gold stock is cheap and could be part of your equity portfolio at current prices. Analysts remain bullish on EQX stock and expect it to gain 36% according to consensus price target estimates.