Investing in quality growth stocks trading at a cheap multiple is a proven strategy to generate market-beating returns. It’s essential to consistently identify companies poised to grow revenue and earnings at a steady pace while trading at reasonable valuations.
In this article, I have identified three of the best Canadian stocks you can buy with $25,000.
Is this TSX stock undervalued right now?
NFI Group (TSX:NFI) is a Canadian bus manufacturer with a market cap of $1.78 billion. It operates globally in North America, the U.K., Europe, and Asia Pacific.
It designs and manufactures transit buses, coaches, medium-duty shuttles, and cutaway buses under brands including New Flyer, Alexander Dennis, and ARBOC. Through NFI Parts, NFI also provides electric vehicle infrastructure, aftermarket parts, and connected vehicle diagnostics.
Analysts tracking the TSX stock expect adjusted earnings to increase to $1.19 per share in 2026, compared to a loss of $0.03 per share in 2024. Comparatively, free cash flow is forecast to improve to $168 million in 2026 from an outflow of $18 million in 2024.
If NFI stock is priced at 20 times forward earnings, it should trade around $24 in May 2026, indicating an upside potential of 60% from current levels.
Is this TSX dividend stock a good buy?
Bird Construction (TSX:BDT) is a construction company that provides comprehensive construction services across industrial, building, and infrastructure markets. It specializes in complex industrial facilities, institutional buildings like healthcare and education facilities, civil infrastructure including roads and bridges, and commercial developments.
Bird offers electrical, mechanical, and instrumentation services, as well as modular fabrication and contract mining operations. It serves diverse sectors, including oil and gas, renewable energy, nuclear, and water treatment, providing both new construction and retrofit services.
BDT stock is down 20% from all-time highs and offers shareholders a dividend yield of 2.2%. Analysts tracking the TSX stock expect adjusted earnings to grow from $2.04 per share in 2024 to $3.93 per share in 2027. In this period, free cash flow is forecast to increase from $84 million to $170 million.
If BDT stock is priced at 15 times forward earnings, it could trade around $58 in May 2027, indicating an upside potential of over 100% in the next two years.
Is the energy stock a buy, sell, or a hold?
The final stock on the list is Alvopetro Energy (TSXV:ALV), which has a market cap of $214 million. Alvopetro Energy is engaged in acquiring, developing, developing, and producing hydrocarbons in Brazil and Canada.
In the last 12 months, the energy stock has paid investors a dividend of $0.40 per share, translating to a tasty yield of 8.4%. It suggests that Alvopetro’s annual dividend expense is around $14.6 million.
Comparatively, Bay Street expects its free cash flow to increase from $28 million in 2024 to $71 million in 2029. A widening cash flow should help Alvopetro raise its dividends and strengthen its balance sheet over the next few years.
If the TSX dividend stock is priced at just eight times forward free cash flow, which is reasonable, it will trade around $12 per share in early 2029, up 100% from current levels. If we include dividend reinvestments, cumulative returns could be closer to 150% over the next four years.
