The TSX Composite Index trended higher in 2024, with top Canadian stocks witnessing solid gains. Factors like a moderation in inflation, interest rate cuts, and increased investments in artificial intelligence (AI) infrastructure supported growth.
While the broader markets trended higher, a few fundamentally strong Canadian stocks are still undervalued and trading cheaply, presenting a solid buying opportunity for long-term investors.
With this backdrop, here are five cheap Canadian stocks to buy right now with $5,000.
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goeasy
goeasy (TSX: GSY) stock offers significant value near the current market price. Notably, shares of this subprime lender have delivered exceptional gains over the past decade and significantly outperformed the broader market index. Thanks to its ability to generate double-digit revenues and earnings growth, goeasy has enhanced its shareholders’ value by steadily growing its dividends.
goeasy’s leadership in the non-prime lending market, expanding consumer loan portfolio, and solid credit underwriting capabilities position it well for sustained earnings growth in the future. Further, goeasy’s financials will likely benefit from new product launches, geographic expansion, omnichannel offerings, and diversified funding. Despite these strengths, goeasy stock trades at a low next-12-month (NTM) P/E (price-to-earnings) of 9, which is attractive considering its double-digit earnings growth rate, high ROE, and decent dividend yield.
ADENTRA
ADENTRA (TSX: ADEN) is another compelling stock currently trading at a discounted price. Shares of this leading distributor of architectural building products have corrected about 17% in the last three months due to inflation and elevated interest rates. However, the company is well-positioned to see a rebound in demand, which will boost its organic volumes and overall operational performance.
The company is focusing on acquiring higher-margin businesses, expanding sales of high-value ready-to-install products, leveraging its global sourcing program, implementing strategic pricing, and controlling expenses to enhance profitability. These initiatives will support ADENTRA’s growth and will likely boost its stock price. Further, potential interest rate cuts and aging housing stock will give ADENTRA opportunities to accelerate its growth.
WELL Health
WELL Health (TSX: WELL) is growing rapidly, with shares of the Canadian omnichannel healthcare company increasing by 61% in three months. This growth reflects solid organic sales due to a surge in patient visits and benefits from acquisitions. While WELL stock has gained substantially, it trades at an NTM EV/sales (Enterprise Value-to-Sales) multiple of 2.0, well below its historical average.
WELL Health is poised to deliver solid growth led by solid momentum in its Canadian Patient Services business. Further, its strong acquisition pipeline, a growing network of physical and virtual clinics, use of AI to develop new products, and cost-saving initiatives augur well for growth.
Lightspeed
Lightspeed (TSX: LSPD) stock is too cheap to ignore. Shares of this cloud-based commerce platform are trading lower due to macroeconomic uncertainties and pressure on consumers’ discretionary spending. As a result of the pullback, this Canadian tech company is now trading at a NTM EV/sales ratio of 1.5 and a price-to-sales (P/S) ratio of 2.0 – both near multi-year lows.
Despite the stock’s discounted valuation, Lightspeed will likely benefit from the global shift toward digital multi-channel platforms. Lightspeed’s solid organic sales and strategic acquisitions position it well to deliver higher sales. Furthermore, its growing base of high-value customers, rising average revenue per user, and focus on achieving sustainable profitability will support the recovery in its share price.
BCE
BCE (TSX: BCE), one of Canada’s top communication companies, grapples with heightened competitive activity and macro challenges. These headwinds have weighed on its stock. BCE stock has dropped over 31% in a year, trading at a NTM P/E ratio of 11.7, which is at a multi-year low.
Nonetheless, BCE focuses on driving profitability through efficient subscriber growth and cost optimization, which could support earnings growth. Moreover, BCE will likely benefit from its ongoing investments in fibre network upgrades, fast mobile 5G services, and increased focus on high-growth businesses like digital advertising, cloud computing, and security services.
