While the TSX Index hovers near record highs, several companies across various sectors are trading at attractive valuations. In this article, I have identified two cheap tech stocks Canadian investors should add to their watchlist in June 2025. Let’s see why I’m bullish on these undervalued stocks right now.
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Is this TSX tech stock undervalued?
Valued at a market cap of $241 million, Alithya Group (TSX: ALYA) provides information technology services and solutions. It is a Canadian technology consulting firm providing enterprise transformation, strategic consulting, and digital services across North America and internationally.
Alithya specializes in enterprise resource planning, cloud infrastructure, AI and machine learning, cybersecurity, and legacy system modernization, serving financial services, healthcare, government, manufacturing, and other sectors through proprietary solutions and partnerships with Microsoft, Oracle, and Salesforce.
In fiscal Q4 (ended in March), Alithya reported revenue of $125.3 million, representing a 4% year-over-year increase. It reported a record gross margin of 36.8% and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 14.4%, the company’s highest profitability levels to date.
Alithya’s transformation strategy centers on enterprise application modernization, leveraging data and AI capabilities to drive client efficiencies. This approach has proven resilient even during economic uncertainty, as these mission-critical investments continue to deliver business value for clients.
Strategic acquisitions have enhanced Alithya’s competitive positioning. The recent eVerge acquisition expands Oracle and Salesforce capabilities while adding smart shoring capacity in India, complementing the successful XRM Vision integration completed earlier.
These combinations have already generated new business opportunities that neither entity could pursue independently, including Microsoft Project Operations implementations for provincial government agencies and global payments companies.
With net debt-to-EBITDA below two times and strong cash generation, Alithya maintains financial flexibility for additional strategic acquisitions.
Analysts tracking the TSX stock expect it to expand adjusted earnings per share from $0.14 in 2024 to $0.45 in 2029. If ALYA stock is priced at 10 times forward earnings, which is relatively cheap, it should almost double in the next three years.
Is this health-tech stock still a good buy?
Valued at $600 million by market capitalization, Vitalhub (TSX: VHI) stock has returned nearly 600% over the last five years. Vitalhub is a Canadian healthcare technology company specializing in mission-critical information systems for hospitals, mental health facilities, long-term care, and community health organizations. Its solutions include electronic health records (EHR), patient flow management, case management, and workforce automation platforms across Canada, the United States, the United Kingdom, and Australia.
Vitalhub represents an attractive investment opportunity due to several factors. It operates in the rapidly growing digital health sector, with strong recurring revenue streams. Moreover, its long-term software maintenance and support contracts provide it with financial stability.
Vitalhub’s specialized focus on healthcare creates significant switching costs, as providers become deeply integrated with its workflows and data systems, which ensures customer retention.
The company’s growth strategy focuses on expanding into North America, targeting the larger U.S. healthcare market. Strategic acquisitions continually expand their product portfolios and geographic reach, while innovative solutions, such as SHIFT AI for workforce management and home health monitoring platforms, position them for future growth.
Vitalhub benefits from network economies as more healthcare providers join its ecosystem, increasing platform value for all users. A diversified product suite serves multiple healthcare segments, from mental health (TREAT platform) to long-term care (Vitals Software), reducing market concentration risk.
The recurring revenue model, combined with cross-selling opportunities to existing clients and continuous product innovation, including AI-driven analytics, creates multiple growth vectors that make VitalHub an appealing healthcare technology investment.
Analysts tracking the TSX stock expect it to expand adjusted earnings per share from $0.11 in 2024 to $0.41 in 2027. If VHI stock is priced at 35 times forward earnings, which is reasonable, it should gain over 30% over the next 18 months.
