Investors with a high-risk appetite could consider gaining exposure to growth stocks trading at reasonable valuations to generate market-beating gains and benefit from the power of compounding. In this article, I have identified two top Canadian stocks you can buy right now with $5,000.
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Is this TSX stock a good buy?
Valued at a market cap of $112 million, Xtract One (TSX: XTRA) develops artificial intelligence (AI) powered threat detection gateway solutions for security screening applications. It operates through Platform and Xtract segments, offering products like SafeGateway and SmartGateway that automatically scan for concealed weapons, including guns, knives, and explosive components, without invasive searches.
These solutions serve stadiums, arenas, casinos, schools, healthcare facilities, and entertainment venues across the U.S., Japan, France, the U.K., and Canada.
It also provides Xtract One View, a cloud-based management platform for monitoring and analyzing facility security data through centralized dashboard controls.
Xtract One reported weaker-than-expected third-quarter (Q3) results, with revenue declining to $3.5 million from $4.7 million year over year.
CEO Peter Evans attributed the disappointing results to several factors: a shift toward larger Fortune 100 customers requiring longer evaluation periods, economic uncertainty causing deployment delays, and customers pausing to evaluate the new Xtract One Gateway alongside the SmartGateway before making final decisions.
The company’s sales mix also shifted, with only 65% coming from upfront purchases versus 80% in the prior year, impacting immediate revenue recognition while building stronger recurring revenue streams.
Despite quarterly weakness, Xtract One’s contractual backlog remained robust at $36.5 million, near record levels. The small-cap stock maintains a healthy pipeline of approximately $100 million in opportunities, with $40 million in late-stage development and an additional $46 million in active RFPs (request for proposals).
The Xtract One Gateway launch is generating momentum, with $6.7 million in initial orders from five customers and shipments scheduled for July. Average deal sizes are increasing threefold, and the product addresses massive markets, including K-12 schools ($15-30 billion) and distribution centres ($8 billion).
Management expressed confidence in Q4 acceleration and expects the business to reach new record backlog levels by fiscal year-end. While near-term execution challenges persist, the company’s expanding addressable market and product portfolio position it well for future growth as operational headwinds subside.
Analysts tracking the TSX stock forecast sales to rise from $16 million in fiscal 2025 (ended in July) to $83 million in 2029. Xtract One is forecast to end 2029 with a free cash flow of $22 million, compared to an outflow of $8 million in 2025. If XTRA stock is priced at 15 times forward FCF, which is not too expensive, it could almost triple over the next three years.
Is this TSX stock undervalued?
Down almost 70% from all-time highs, NFI Group (TSX: NFI) should also be part of your shopping list in August 2025. The company’s recent debt restructuring efforts improved liquidity to $326.7 million while reducing interest expenses and providing better covenant flexibility. Management targets a leverage reduction to less than 2.5 times by 2026 from current levels of 4.9 times.
NFI maintained robust backlog levels at $13.5 billion across 16,198 equivalent units, with a healthy 119.9% book-to-bill ratio. North American production slots remain sold through 2026 with options extending to 2030. Manufacturing margins improved year over year to 10.6% from 8.0%, reflecting better pricing and operational efficiency.
The company reaffirmed 2025 revenue guidance of $4 billion with adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) forecast at $340 million.
The TSX stock is forecast to end 2026 with a free cash flow of $137 million, compared to an outflow of $18 million in 2024. If NFI stock is priced at 25 times forward FCF, it could gain around 50% over the next six months.
