Despite yesterday’s pullback, the S&P/TSX Composite Index is up over 22% this year, thanks to the post-election rally. Amid improving investor optimism, investors can buy the following three mid-cap stocks offering excellent buying opportunities due to their solid financials and healthy growth prospects.
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Lightspeed Commerce
On Monday, Lightspeed Commerce (TSX: LSPD) announced it would slash 200 jobs amid its reorganization initiatives to improve profitability. Management also added that it will incur most of these restructuring charges in the third quarter of fiscal 2025. Amid the fear of restructuring charges hurting its third-quarter earnings, the company witnessed substantial selling yesterday, with its stock price falling 8.2%.
However, Lightspeed’s long-term growth prospects look healthy amid an increasing transition toward an omnichannel selling model. Also, the company continues to launch innovative products to meet the ever-increasing needs of its customers, especially in the North American retail and EMEA (Europe, the Middle East, and Africa) hospitality sectors. Also, its unified POS and payments offering continues to expand the adoption of its payments platform, thus driving its GPV (gross payment volume). Along with these growth initiatives, the reorganization could boost its profitability, making it attractive for investors with a three-year investment horizon.
goeasy
Another midcap stock I am bullish on would be goeasy (TSX: GSY), an alternative financial services company that serves primarily subprime customers. The company has been expanding its loan portfolio at a healthier rate, boosting its financials. Over the previous five years, its topline and diluted EPS (earnings per share) have grown at an annualized rate of 20.1% and 28.7%, respectively.
Moreover, I expect the uptrend in goeasy’s financials to continue due to its full range of product offerings, multiple distribution channels, and geographical expansion. Also, falling interest rates could boost economic activities, driving credit demand. Meanwhile, the company’s management expects its 2026 loan portfolio to be between $6–$6.4 billion, with the midpoint representing a 41% increase from its current position. An expanding loan portfolio could drive its topline at an annualized rate of 14% while improving its operating margin to 42% compared to 38.1% in 2023.
goeasy has also rewarded its shareholders by raising its dividends at a 30% CAGR (compound annual growth rate) for the last 10 years. With a forward dividend yield of 2.7% and an attractive NTM (next 12 months) price-to-earnings multiple of 8.9, goeasy offers an attractive buying opportunity.
Kinaxis
Kinaxis (TSX: KXS) combines proprietary technologies and techniques to enable companies to orchestrate end-to-end supply chain networks. The company reported an impressive third-quarter performance, with its topline growing by 12% amid solid performance from its SaaS, professional services, and maintenance and support segments. It witnessed solid customer wins during the quarter, while customer retention remains higher.
Amid topline growth and gross margin expansion, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 32%, while its adjusted EBITDA margin expanded from 21% to 25%. It also generated $29.5 million of cash from its operations. After reporting its third-quarter performance, the company has raised its 2024 profitability guidance for the third consecutive time. Also, the expanding customer base, higher customer retention rate, and growing annual recurring revenue support its long-term growth, thus supporting its stock price growth in the coming years.
