The ongoing market volatility has driven the valuations of several stocks across multiple sectors lower. In fact, various TSX stocks have entered bear market territory, falling more than 20% from recent highs.
However, given historical trends, every significant dip should be viewed as a buying opportunity to benefit from outsized gains when investor sentiment improves. In this article, I have identified two discounted TSX growth stocks that are poised for explosive gains.
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Is the TSX stock undervalued?
Valued at a market cap of $3.70 billion, EQB (TSX:EQB) has returned 790% to shareholders since March 2004. However, if we adjust for dividend reinvestments, cumulative returns are closer to 1,100%. Despite these outsized gains, the TSX bank stock is down 15% from all-time highs, allowing you to buy the dip.
EQB, Canada’s Challenger Bank, posted solid fiscal first-quarter (Q1) 2025 (ended in January) results despite growing economic uncertainty. Adjusted earnings per share were $2.98, up 19% sequentially and 8% year over year.
The bank reported a return on equity of 15.2%, hitting its target range of 15-17%. The net interest margin remained stable at 2.07%, up six basis points from last year, while non-interest revenue reached a record $59 million, accounting for 18% of total revenue.
Chief Executive Officer Andrew Moor expressed optimism about growth prospects despite potential tariff concerns, noting EQB’s built-in risk mitigators: “We lend in large urban markets with diversified economies, don’t lend on balance to large corporate customers with direct exposure to U.S. trade actions.”
EQB’s uninsured single-family mortgage originations grew 23% year over year and 13% sequentially, with application volumes in February increasing 29% compared to last year. The bank expects momentum in conventional lending as six Bank of Canada rate cuts since June 2024 might stimulate the housing market.
Unlike some competitors facing a “mortgage renewal cliff,” EQB noted that 74% of its uninsured single-family mortgages renewing in 2025 would do so at lower rates, assuming current market conditions.
EQB added 26% more customers year over year, reaching 536,000, with growing numbers choosing it as their primary bank. The digital bank has seen steady increases in customers depositing their payroll directly, a sign of deepening customer relationships.
The company’s total loans under management reached $69.3 billion, up 2% from last quarter and 8% from the previous year. This growth was driven by insured multi-residential lending and decumulation products targeted at retirees.
Priced at 7.9 times forward earnings, the TSX stock trades at a discount of 30% to consensus price targets.
Is the TSX dividend stock a buy?
Valued at a market cap of $1.21 billion, Savaria (TSX:SIS) provides accessibility solutions in Canada and other international markets. The TSX dividend stock is down 28% from all-time highs increasing its forward yield to 3.3%.
In Q4 of 2024, Savaria reported revenue of $223.3 million, up 3% year over year, with organic growth of 0.9% and a favourable foreign exchange impact of 2.1%. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) reached $42.9 million for the quarter, indicating a margin of 19.2%, marking the third consecutive quarter of EBITDA above $40 million.
Savaria reported adjusted EBITDA of $161.2 million for the full year with an 18.6% margin, an improvement of 310 basis points over 2023. Net earnings increased 30% to $49 million, compared to $37.8 million in 2023.
Savaria’s patient care segment performed impressively, delivering 20.6% organic growth in Q4 and achieving its best-ever quarterly EBITDA margin of 23.1%. The company’s accessibility segment in North America grew 8.4% for the full year despite a flat performance in Q4.
Due to uncertainties around recently announced U.S. tariffs on Canadian goods, Savaria revised its 2025 guidance to approximately $925 million in revenue with an adjusted EBITDA margin between 17% and 20%.
Analysts tracking the TSX stock expect its free cash flow to increase to $95 million in 2026 from $73.6 million in 202. So, priced at 12.7 times forward FCF, Savaria stock is quite cheap and trades at a 40% discount to consensus price targets.
