The TSX Index has experienced a drastic pick-up in turbulence since the year began. Still, the recent wave of choppiness hasn’t quite hit the Canadian stock market as it has the U.S. indices (think the S&P 500 and Nasdaq 100, the latter of which is right back into correction territory following Thursday’s mild decline). With a Canadian recession, inflation, and more on the minds of Canadians, it’s hard to believe that the TSX Index is around 2% away from its prior highs. Indeed, the resilience and value-heaviness of the index seem to be acting as stabilizers.
Despite tariff threats and all the sort, I think the TSX Index has a good shot of outperforming both the S&P 500 and Nasdaq 100 this year and perhaps next year. Of course, if no recession happens and tariffs don’t come to be, it could be off to the races again for the U.S. stock market. Either way, I’d look to TSX stocks if you’re looking for relative value, steadiness, and resilient performance as we attempt to escape a year that could fall short compared to the last two.
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The mid-cap stocks are worth a look!
The mid-cap scene is an area where investors may be able to unearth a bit of extra value. Of course, fewer investors, on average, pay attention to such names, especially compared to the mega-caps at the very top of the TSX Index. Either way, these names deserve respect, especially as investors ditch the obvious growth plays due to their stretched valuation multiples and opt for lesser-known, deeper-value options hiding in the mid-cap scene.
In this piece, we’ll check in with one mid-cap name that I view as a fantastic bargain right now. Of course, they may be untimely as headwinds continue to weigh through the year. But with a low bar for expectations and plenty of longer-term upside (I’m still a fan of the growth narrative), patient investors may have something to stash on their shopping lists this spring. Let’s look at one Canadian name and a U.S. one in the mid-cap universe that I find interesting at current levels.
Cargojet
Cargojet (TSX: CJT) stock looks severely oversold after plummeting around 38% from its 52-week highs. With shares down close to 65% from all-time highs, the cargo airline may be one of the best deals to pick up while uncertainties and economic fears are close to a high point. Sure, Cargojet has faced headwinds that could worsen as Canadian consumers opt to spend less in the face of profound tariff-fuelled disruption. That said, I don’t think the impact will last forever. In due time, things will normalize, and Cargojet may have tailwinds to enjoy again.
For now, the stock looks deeply undervalued at 12.88 times trailing price to earnings (P/E), or 15.15 times forward P/E. Sure, it’ll take some time to get off the tarmac again, but with fairly modest analyst expectations and plenty of longer-term upside, I’d give the $1.3 billion firm the benefit of the doubt.
