The Canadian benchmark index has risen by over 14% year to date. Yet, several fundamentally strong stocks remain undervalued. While these Canadian stocks are trading at a discounted valuation, they are primed for returns, making them a buy near the current levels.
Against this backdrop, here are three TSX stocks that are trading below their intrinsic value and have strong growth prospects.
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Lightspeed
Speaking of undervalued stocks, Lightspeed Commerce (TSX:LSPD) is one worth considering now. The Canadian tech firm has been under pressure, losing more than 23% of its value this year amid broader economic uncertainty and investor disappointment over its decision to stay public rather than go private.
Nonetheless, the stock has shown some recovery, rising over 16% in the last three months. However, it still trades at a next 12-month enterprise value-to-sales (EV/sales) multiple of just one. This remains significantly low, considering the company’s high growth potential. As a key enabler of omnichannel commerce, Lightspeed could benefit from the ongoing shift toward multi-channel selling platforms.
The company is making steady progress in its core growth markets while also improving profitability. Customer location counts are increasing, and average revenue per user (ARPU) is trending higher, indicating that its platform is gaining traction. Its strategy to expand its North American retail presence and grow within European hospitality is beginning to pay off, fueling both customer growth and stronger margins.
With a combination of low valuation, an expanding customer base, higher adoption of its software and payment solutions, and rising ARPU, Lightspeed looks well-positioned to deliver strong growth.
goeasy
goeasy (TSX:GSY) is another high-quality stock that remains undervalued despite its solid growth potential. This Canadian financial services firm continues to deliver strong financials and is rewarding shareholders with higher dividend payments. Thanks to its double-digit revenue and earnings growth, goeasy stock has delivered above-average capital gains of about 271% in the last five years. In addition, goeasy has paid dividends consistently for 21 years and has raised its dividend for 11 consecutive years.
With its leadership in Canada’s non-prime leasing and lending space and access to diverse funding sources, the company is poised to continue expanding its consumer loan portfolio. Furthermore, its focus on diversifying product offerings and expanding distribution channels will enable it to grow its customer base and drive revenues at a solid double-digit rate. In addition, its strong underwriting capabilities, steady credit and payment performance, and operational efficiency augur well for sustained profitable growth.
While goeasy has significant growth potential, its stock remains attractively priced. With a forward price-to-earnings ratio of 10.3, goeasy stock trades at a valuation that doesn’t justify its double-digit earnings growth, a rising dividend, and high return on equity (ROE). This makes it a compelling choice for long-term investors.
Cargojet
Cargojet (TSX:CJT) is another cheap stock that investors can hold for significant returns. Shares of this leading air cargo operator are down about 31% from its 52-week high of $144.97. While the stock is undervalued, its solid fundamentals remain intact, and the company continues to deliver strong financial results.
Operating a fleet of 41 freighters, Cargojet has built a diversified revenue base supported by long-term contractual agreements. These contracts provide reliable cash flow and healthy margins, even during periods of market volatility. Efficient cost management across its network further supports profitability, while resilient demand for time-sensitive air freight continues to drive steady performance.
Beyond operational strength, Cargojet has a solid balance sheet and remains focused on reducing leverage. Strategic investments in network connectivity position the company to capture future growth while maintaining financial discipline. Importantly, its dominant role in Canada’s time-critical air freight market ensures it is well-placed to benefit from structural tailwinds in e-commerce. Moreover, with the ability to scale operations without significant incremental costs, Cargojet is well-positioned to meet rising demand while driving long-term shareholder value.
