While diversified exchange-traded funds and mutual funds should form the core of your portfolio, those with a higher risk appetite should also consider investing in individual stocks. The ongoing market turbulence affecting equities provides investors with an opportunity to buy and hold undervalued stocks that are positioned to outperform the broader markets.
In this article, I have identified two cheap TSX stocks that Canadian investors could consider buying right now.
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Is this TSX stock a good buy right now?
Valued at a market cap of $408 million, NanoExplore (TSX: GRA) manufactures and supplies graphene products for industrial use in Australia. In the fiscal second quarter (Q2) of 2025 (ended in December), NanoExplore reported revenue of $33.1 million, an increase of 14% year over year. Notably, the company achieved its tenth consecutive quarter of margin expansion, with adjusted gross margins improving 190 basis points to 21.3%.
Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for the quarter reached $1.1 million, compared to a loss of $93,000 in the same period last year. NanoExplore ended fiscal Q2 with a strong liquidity position of $31 million, including $21 million in cash.
Chief Executive Officer (CEO) Soroush Nazarpour addressed ongoing tariff concerns, noting that while short-term disruptions are inevitable, the company doesn’t anticipate a lasting negative impact on its business.
NanoXplore continues to make progress on its five-year strategic plan, including expanding its graphene-enhanced sheet moulding compound (SMC) capacity in Canada and building out additional manufacturing capacity in Statesville, North Carolina. Equipment for the U.S. expansion is expected to be delivered during fiscal Q4, with production starting in the summer of 2025.
NanoExplore reported advancements in its dry-process graphene production, which began last July. It emphasized that customer feedback has been consistently positive regarding the new cost structure, which makes graphene competitive with other carbon-based additives, such as Carbon Black. NanoXplore is finalizing plans for a large-scale pilot plant, with purchase orders for major equipment expected within the next month.
For fiscal 2025, management is maintaining its revenue range of $140 million to 155 million. However, it expects revenue to be at the lower end due to delays in new program launches from its two largest customers and uncertainty surrounding potential tariffs. Analysts remain bullish on the TSX stock and expect it to increase by 80% over the next year, based on consensus price targets.
Is this small-cap TSX stock undervalued?
Valued at a market capitalization of $142 million, Electrovaya (TSX: ELVA) is a battery manufacturer operating in the rapidly expanding clean energy segment.
Electrovaya maintained its momentum in fiscal Q1 of 2025 (ended in December), reporting US$11.2 million in revenue with gross margins exceeding 30%. It also reported a positive adjusted EBITDA for the seventh consecutive quarter.
While revenue slightly declined from US$12.1 million in the same period last year due to delivery timing, the company ended the quarter with approximately US$1 million in finished goods awaiting shipment.
The lithium-ion battery manufacturer has secured a US$51 million direct loan approval from the Export-Import Bank of the United States under the “Make More in America” initiative to expand manufacturing in Jamestown, New York. To support closing conditions, Electrovaya raised US$12.8 million in equity financing, which CEO Dr. Raj Das Gupta noted was impressive given the challenging market for clean technology companies.
With strengthened finances, Electrovaya is accelerating its plans to assemble battery systems at the Jamestown facility. Commercial operations are expected to begin in April 2025, and Electrovaya views this expansion as both a growth driver and a strategic move to mitigate potential trade barriers.
Electrovaya is also seeing increased demand from existing customers who want to repower their warehouse infrastructure with its batteries. It expects to ship its first modules to a global construction original equipment manufacturer in Japan and reports growing interest through its partnership with Sumitomo Corporation.
Management reiterated its fiscal 2025 revenue guidance of exceeding US$60 million, with quarter-over-quarter growth expected throughout the year.
Analysts tracking the TSX stock expect it to report a free cash flow of $60 million in fiscal 2028. So, if the stock is priced at 15 times forward free cash flow, it should surge by over 750% in the next two years.
