With the TSX Index up 21% in 2024, it has been an exceptional year for Canadian stocks. The normal average return for the TSX is closer to 7–8%. Certainly, stocks around the world seem pricey.
Yet, there are bargains to be found. In particular, small and mid-cap stocks appear to have reasonable prospects of growth and value. Some of these stocks might have a small shortcoming. It might be an earnings miss or a temporary challenge that they are up against.
However, if the bones of the company are good, you could see a nice rise when factors like year-end tax loss selling abate. If you are wondering what stock to add before the new year, here are three to contemplate now.
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This stock is a good bargain for its growth prospects
Calian Group (TSX: CGY) just delivered a good year of results for shareholders in its fiscal 2024. Revenues increased 13% to $747 million. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased 30%.
The business services and solutions group increased adjusted EBITDA margins by 150 basis points. Free cash flow increased 29% based on strong free cash flow conversion. Yet, the stock is down 3% in the past few days and down 17% in 2024.
Certainly, it doesn’t help that Calian didn’t hit its revenue guidance in 2024. Nonetheless, revenues are still up by a 17% compounded annual growth rate (CAGR) in the past five years. EBITDA is up by a 25% CAGR!
Despite a solid mid-teens growth record and improving profitability, the market doesn’t recognize the strength of its four core business engines.
It’s trading with a 10% free cash flow yield and a price-to-earnings ratio of nine. At some point, the market will shine favourably on Calian again. You may have to be patient, but this stock could work out nicely long term.
A small-cap ready to soar
Another stock to buy before it’s too late is Firan Technologies (TSX: FTG). With a market cap of $178 million, this is still a pretty small business. However, if it can continue its goal to compound by around 15% a year, it won’t stay that way for long.
Firan manufactures specialized cockpit parts and circuit boards for the aerospace industry. Airline manufacturers currently have record backlogs that last years (even decades). Demand for new planes is insatiable. That creates a very positive long-term dynamic for Firan.
Firan’s stock is up 75% in 2024. However, its valuation of 16 times earnings is not extremely demanding given its expected growth rate is about the same.
A stock for growth, value, and income
A final stock to buy is goeasy (TSX: GSY). This stock has a bit of everything for investors: growth, value, and income. It is one of Canada’s largest non-prime lenders. Its large retail network has helped it build a strong brand and community presence across the country.
Due to a weakened economy, large banks have tightened lending practices. As a result, more near-prime consumers are going to goeasy for their lending needs. While its loan yield is coming down, its loans are backed by generally higher quality consumers.
goeasy is expected to increase earnings per share by a mid-teens rate in 2024. Management anticipates a similar rate of growth for years ahead.
This stock trades with a 2.7% dividend (that has been quickly growing) and a price-to-earnings (P/E) ratio of only nine. It is one stock you don’t want to miss out on for 2025 and beyond.
