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.

| More on:
Workers use a microscope to do medical research in a modern laboratory.

Source: Getty Images

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.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BioSyent. The Motley Fool has a disclosure policy.

More on Stock Market

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Stock Market

3 TFSA Mistakes Canadian Investors Should Avoid in 2025

Here are the three common mistakes TFSA investors should avoid in 2025.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, November 29

Overnight strong gains in precious metals prices could lift TSX-listed gold and silver stocks at the open today.

Read more »

cryptocurrency, crypto, blockcahin
Stock Market

2 Crypto Stocks to Buy as Bitcoin Nears US$100k

Crypto stocks such as Coinbase and CleanSpark are poised to deliver outsized returns if the Bitcoin bull run continues.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, November 28

With the TSX trading at record highs, activity may stay quiet today as U.S. markets are closed for Thanksgiving.

Read more »

investment research
Stock Market

CRA Money: Will You Claim These 3 Benefits for 2024?

Canadian investors should consider using the proceeds from multiple CRA tax breaks to invest in value TSX stocks.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, November 27

U.S. personal consumption expenditure and quarterly GDP data will remain on TSX investors’ radar today as concerns about Trump’s tariff…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, November 26

U.S. consumer confidence and new home sales data will remain on TSX investors’ radar today.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, November 25

With solid 5.3% gains in November so far, the TSX Composite Index is currently at record highs.

Read more »