The Canadian benchmark index has delivered impressive gains of over 19% this year, reflecting strong performance across multiple sectors. However, several TSX stocks with fundamentally strong businesses have underperformed and eroded investors’ wealth. Let’s look at a few stocks that missed the mark in 2024 and assess whether they present a value opportunity for investors.
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BCE stock
BCE (TSX:BCE), one of Canada’s top telecommunications companies, has had a tough year, with its stock plummeting over 31% in 2024. The steep decline reflects mounting challenges, including intense competition, shrinking margins, and the impact of economic pressures on consumers’ spending.
Adding to investor concerns, BCE recently announced that its annual dividend will remain unchanged at $3.99 per share through 2025. While this move was strategic to boost its liquidity and financial position, it disappointed investors accustomed to steady dividend increases, further pressuring the stock.
Despite the near-term setbacks, BCE’s fundamentals remain solid. The pause in dividend growth comes after BCE’s acquisition of Ziply Fiber, which will expand its footprint in the U.S. fibre market. While the move didn’t sit well with investors, it positions BCE for long-term growth by diversifying its revenue streams and enhancing its scale.
Given the decline in its share price, BCE offers an exceptionally high yield of over 12%. While such a high yield seems unsustainable, BCE’s focus on cost optimization and growing its subscriber base profitably could support future earnings growth, potentially paving the way for dividend increases down the line.
Further, BCE will likely benefit from ongoing investments in its fibre network and 5G services. These initiatives are expected to attract more subscribers and drive revenue growth. Additionally, the company is capitalizing on emerging opportunities in digital advertising, cloud computing, and cybersecurity—areas poised for significant growth.
While BCE faces short-term challenges, its focus on driving profitable growth, revenue diversification, and investments in network infrastructure augurs well for long-term growth.
Lightspeed stock
Lightspeed (TSX:LSPD) is another top TSX stock that missed the mark in 2024. Shares of this cloud-based commerce platform provider are down about 19%, significantly underperforming the broader markets due to macro uncertainty and concerns over a potential slowdown in consumer spending.
Despite challenges, this tech company is consistently growing its gross payment volumes and organic revenue at a solid pace. The company is well-positioned to capitalize on the ongoing shift toward multi-channel sales platforms, a trend expected to sustain momentum in the coming years. While the stock is undervalued, Lightspeed’s focus on delivering sustainable earnings makes it a compelling long-term investment.
The company’s focus on high gross transaction volume customers is another growth catalyst that will likely drive its revenue per user and support margins. These customers use multiple modules within the platform, which enhances Lightspeed’s customer retention rate and drives higher revenue per user and overall margins. This strategy strengthens Lightspeed’s business model, making it more resilient to market fluctuations.
Additionally, Lightspeed’s strategic acquisitions are poised to drive further growth. These acquisitions will expand Lightspeed’s customer base and increase its global footprint.
In conclusion, while Lightspeed’s recent stock performance has been disappointing, its solid growth prospects, focus on high-value customers, and low current valuation position it as a promising long-term investment.
