The Canadian benchmark index has shown solid resilience over the past year and trended higher, delivering notable gains. The TSX stocks benefitted from investors’ optimism over rate cuts, moderation in inflation, and the growing adoption of artificial intelligence (AI) technology.
Despite the uptrend, several fundamentally strong stocks still look undervalued. While these stocks are trading at cheap, they have significant room for growth, which makes them solid investments for long-term wealth building.
Against this background, here are undervalued TSX leaders to consider now.
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Undervalued TSX stock #1
Trading at a next 12-month price-to-earnings (P/E) multiple of just 8.5, goeasy (TSX: GSY) is a leading undervalued TSX stock that is too cheap to ignore. This financial services company has been consistently growing its earnings at a strong double-digit rate. In addition to its impressive earnings per share (EPS) growth, goeasy has delivered an exceptional average return on equity (ROE) of 26.40% over the past five years. Furthermore, the stock offers an attractive dividend yield of approximately 3.5%. Given these factors, goeasy’s valuation appears highly attractive for long-term investors looking to build wealth.
Despite its low valuation, goeasy is well-positioned for significant revenue and earnings growth. The company’s leadership in Canada’s subprime lending market, wide product range, omnichannel offerings, diversified funding sources, and growing funding capacity will drive higher loan originations and revenues. Additionally, goeasy’s focus on high-quality loans, strong underwriting practices, and solid credit performance will further strengthen its bottom line. Operational efficiencies will also contribute to sustained profitability.
The company’s solid revenue and earnings growth rate, focus on rewarding shareholders with high dividend payments, strong ROE, and low valuation make goeasy a compelling long-term investment.
Undervalued TSX stock #2
WELL Health (TSX: WELL) is another undervalued TSX stock to buy now. This digital healthcare company is rapidly growing its top line while maintaining a strong focus on profitability. Moreover, it is delivering profitable growth. Despite these impressive fundamentals, the stock remains relatively inexpensive, presenting a compelling opportunity for long-term investors.
Currently, WELL Health trades at a next 12-month enterprise value-to-sales multiple of just 1.7—far below its historical average of approximately 4.5. This discount suggests significant upside potential, particularly given the company’s solid growth trajectory and strong financials.
WELL Health’s ability to increase patient visits across its omnichannel healthcare platforms will support its future growth. Additionally, strategic acquisitions have been a key accelerator, consistently delivering higher returns. These investments fuel growth and strengthen WELL Health’s position as a leader in the digital healthcare space.
The digital healthcare company is on track to scale its operations further, aiming to generate $4 billion in revenue from its Canadian business. Acquisitions will continue to play a central role in this expansion, with a strong pipeline of deals valued at over $440 million in annualized revenue. These transactions and strong margins position WELL Health for sustained long-term growth.
The company is on a solid financial footing. It is leveraging technology to boost cash flow and profitability while maintaining a disciplined approach to debt reduction and share dilution. Overall, the combination of strong revenue growth, a focus on profitability, and a low valuation makes WELL Health a compelling investment for long-term investors.
