Spotting undervalued Canadian stocks in a volatile market can feel a bit like treasure hunting. But every once in a while, a few names shine through as solid, overlooked picks that just need a little more attention. Right now, two Canadian stocks look particularly attractive for long-term investors looking for value and growth: Kinaxis (TSX:KXS) and Knight Therapeutics (TSX:GUD). Both are trading below what many analysts believe to be their fair value and offer unique advantages in their respective sectors.
Kinaxis
Kinaxis is based in Ottawa and provides supply chain management software to large, complex organizations. Its platform, RapidResponse, uses real-time data and predictive analytics to help clients make faster, smarter decisions. With supply chains under increasing pressure, from pandemics, geopolitical tension, and general economic uncertainty, demand for Kinaxis’s tools has grown steadily. That’s now showing up clearly in the Canadian stock’s numbers.
In the first quarter of 2025, Kinaxis reported revenue of US$132.8 million, which was up 11% from the same quarter in 2024. Even more impressive, its Software-as-a-Service (SaaS) revenue jumped by 16%, now accounting for the majority of total revenue. This is a good sign, since SaaS revenue tends to be recurring and sticky. The Canadian stock’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at US$33.7 million. This was alongside a margin of 25%, showing that growth hasn’t come at the cost of efficiency. Net income hit US$15.9 million, translating to US$0.55 per diluted share. That’s a significant jump from US$0.21 per share the year before.
Kinaxis is also reinvesting in innovation. It’s rolling out new artificial intelligence (AI)-based features and expanding globally, adding new clients across Europe and Asia. Despite strong fundamentals and a growing backlog, its stock has been flat in recent months. For long-term investors, that could be a window of opportunity. As of early May, Kinaxis trades at around $193 per share, with a market cap near $5.5 billion. It has no debt and over US$250 million in cash, which gives it flexibility for future acquisitions or R&D investment.
Knight Therapeutics
While Kinaxis is focused on the digital transformation of supply chains, Knight Therapeutics is all about helping bring important pharmaceutical products to market, particularly in Latin America and Canada. Headquartered in Montreal, Knight licenses, develops, and commercializes branded medicines across a wide range of therapeutic areas, including oncology and infectious diseases.
In Q1 2025, Knight reported revenue of $88.1 million, up 2% from a year earlier. That might not seem dramatic, but it’s a steady gain considering the Canadian stock faced headwinds from foreign exchange in Latin American markets. The real story was profitability. Net income came in at $2.2 million compared to a loss of $4.5 million in Q1 2024. Earnings per share (EPS) improved to $0.02 from a $0.04 loss, thanks to tighter cost controls and better performance from key brands.
Knight has also been making bold moves. In early 2025, it acquired Paladin Pharma for $100 million, expanding its footprint in Canada. It also launched new treatments in Mexico, including Minjuvi, a drug used for certain types of lymphoma. This expansion is key for future growth, especially as Knight focuses on bringing niche, high-impact therapies to markets that are underserved by bigger pharmaceutical players.
Bottom line
Both Kinaxis and Knight offer something different to a Canadian portfolio. Kinaxis has the tech growth angle with high gross margins and recurring revenues, while Knight offers healthcare exposure with international reach and a deep licensing model. Neither Canadian stock is overly flashy, and neither is priced at extreme multiples right now, which is part of the appeal.
In a market where investors are wary of overhyped growth names or yield traps, these two Canadian stocks stand out for fundamentals and future potential. Each stock is profitable, well-capitalized, and executing on strategic plans. And yet, both trade below what many would argue is fair value. That combination of quality and price is what makes a stock truly undervalued.
