Investing in undervalued stocks with strong fundamentals should help Canadians deliver outsized gains over time. While the broader markets are trading near all-time highs, several TSX stocks across multiple sectors are priced at a discount to their intrinsic values. In this article, I have identified two top Canadian stocks you can buy now with $2,500. Let’s see why.
Secure Energy Services stock
Valued at a market cap of $3.5 billion, Secure Waste Infrastructure (TSX:SES) is a waste management and energy infrastructure company. The Waste Management segment includes facilities for processing and recycling industrial waste, water management, and specialty chemicals. The Energy Infrastructure segment focuses on crude oil transportation and storage through pipeline networks and terminals. Last year, the company changed its name from Secure Energy Services, rebranding itself as Secure Waste Infrastructure.
It recently entered a $1.149 billion agreement with Waste Connections to divest 29 facilities formerly owned by Trevita Corp. Despite this divestiture, Secure Waste reported solid financial results for the third quarter (Q3) of 2024, with net income reaching $94 million ($0.39 per basic share), a 100% increase from the previous year.
While sales were down 12% due to asset sales, Secure Waste saw growth in key segments, including industrial landfills, metals recycling, and specialty chemical sales. The Energy Infrastructure segment also showed improvement, boosted by contributions from the new Clearwater heavy oil terminal.
Secure’s financial position remains strong as it ended Q3 with a total debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) of $682 million. It expects to achieve the upper end of its full-year adjusted EBITDA guidance range of $470-490 million, with approximately 70% coming from the Waste Management segment.
In 2025, Secure Waste plans to invest $75 million in growth capital expenditures to expand the Clearwater heavy oil terminal and pipeline infrastructure. It has also committed to maintaining its annualized base dividend of $0.40 per share, indicating a yield of 2.6%.
Priced at 12.4 times forward earnings and 14.6 times forward free cash flow, the TSX dividend stock trades at a discount of 22% to consensus price targets.
Propel Holdings stock
Another cheap TSX stock is Propel Holdings (TSX:PRL), a company that operates in the financial lending space. Valued at a market cap of $1.5 billion, Propel operates in 45 states and provinces across North America, originating over US$2 billion in total loans to date.
Since 2019, Propel has grown its revenue at a compounded annual growth rate of 47%. Comparatively, its adjusted net income has risen by 105% annually over the last five years.
The growth story for Propel is far from over, given that it estimates the global fintech lending market to be US$1 trillion. Analysts tracking Propel forecast its revenue to grow from $316 million in 2023 to almost $800 million in 2026. Comparatively, adjusted earnings are projected to expand from $0.98 per share to $3.3 per share in 2026.
So, priced at 12 times forward earnings, Propel stock is cheap, given its stellar growth estimates. Analysts remain bullish on the TSX stock and expect it to gain over 20% in the next 12 months.
