Canadian investors should consider gaining exposure to undervalued stocks that are growing steadily. Generally, growth stocks deliver outsized gains during bull runs and underperform the broader markets when sentiment turns bearish. In 2025, several growth stocks have pulled back from all-time highs due to an uncertain macro environment. However, the ongoing drawdown allows you to buy the dip in undervalued TSX stocks such as Propel Holdings (TSX:PRL).
Valued at a market cap of $1.27 billion, Propel is a financial lending company that went public in 2021. Since its initial public offering, the TSX stock has returned 260% to shareholders. However, it also traded 22% below its all-time highs in May 2025.
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Is this TSX stock a good buy?
Propel’s sales increased from US$73.5 million in 2020 to US$450 million in 2024. Unlike several other growth stocks, Propel is profitable, ending 2024 with adjusted earnings per share of US$1.64.
Propel Holdings delivered record results in the first quarter (Q1), posting strong growth across all key metrics. The fintech lender benefits from tightening credit conditions at traditional banks and robust demand from underserved consumers.
The Toronto-based company reported record quarterly revenue of US$138.9 million, a 44% increase from the year-ago period, driven by total originations of US$154 million, a 32% year-over-year jump. Net income surged 79% to US$23.5 million, while adjusted net income rose 49% to US$23.4 million, representing quarterly records.
“We had an exceptionally strong start to the year and are proud to have delivered another quarter of record results,” said CEO Clive Kinross, noting this was the strongest quarter in the company’s 14-year history.
The standout performance came despite macroeconomic uncertainty, with Propel demonstrating resilient credit quality. The provision for loan losses decreased to 42% of revenue from 44% in the prior year, marking Propel’s strongest credit performance in the last three years. Net charge-offs remained stable at 12% of credit assets.
Propel’s success reflects broader market dynamics favouring alternative lenders. According to Federal Reserve data, traditional bank rejection rates for credit applications jumped to 21.5% from 18.7% a year ago, while consumer demand for credit increased to 27% from 23%.
“For us, some macroeconomic uncertainty is an opportunity,” Kinross explained, noting that consumers locked out of traditional banking are turning to Propel’s platforms.
The company’s expansion into the U.K. through its Quid Market acquisition exceeds expectations, with Q1 performance ahead of projections. Integration remains on track as Propel targets becoming a market leader among Britain’s 20 million underserved consumers.
What’s next for the TSX dividend stock?
Propel’s healthy profit margins also allow it to pay shareholders an annual dividend of US$0.72 per share. In fact, the company has increased its dividends from US$0.30 per share in 2023.
With unemployment near historic lows and wage growth outpacing inflation in key sectors, Propel expects continued strong performance throughout 2025, serving just over one million customers among the 60 million underserved consumers in its core U.S. market.
Bay Street expects Propel to increase sales to US$888 million in 2027 with adjusted earnings per share of US$3.80. Today, the TSX dividend stock is priced at nine times forward earnings, lower than its three-year average of 9.7 times.
If PRL stock maintains its current multiple, it will trade around $49 per share in May 2027, indicating upside potential of almost 50% from current levels.
