The Canadian stock market has carried its momentum into 2025, with many companies delivering impressive gains. Yet, even in the midst of this rally, a handful of fundamentally strong businesses continue to trade cheaply and remain undervalued, offering investors an opportunity to buy in before the broader market catches on.
Against this background, here are three TSX stocks that are just waiting for the right catalyst – their starting gun – to propel them higher.
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Lightspeed
Lightspeed Commerce (TSX: LSPD) is one cheap stock that is worth considering now. Shares of the Canadian tech firm have dropped over 23% this year amid broader economic uncertainty. Moreover, the company’s decision to stay public rather than go private further disappointed investors. While the stock has started showing some recovery, it still trades at a next 12-month enterprise value-to-sales (EV/sales) multiple of one. This valuation looks cheap considering its scale, customer growth, and high growth potential.
Lightspeed is well-positioned to benefit from the ongoing shift toward multi-channel selling platforms and higher adoption of its software and payment solutions. The company is making steady progress in its core growth markets and is moving towards profitability with adjusted free cash flow nearing breakeven. This is likely to give a boost to its stock price. Further, its customer locations are increasing, while its average revenue per user (ARPU) is trending higher, indicating that its platform is gaining traction.
The e-commerce platform’s strategy to expand its North American retail presence and grow within European hospitality is driving customer growth and margins. Furthermore, its growing capital business and expansion of Lightspeed Payments are expected to boost gross profits and margins in the quarters ahead, supporting its share price.
goeasy
goeasy (TSX: GSY) is another cheap stock offering high growth and solid dividend income. This Canadian financial services firm specializes in non-prime consumer lending and has been delivering strong financial results. Thanks to its double-digit revenue and earnings growth, goeasy stock has delivered above-average capital gains of about 284% in the last five years. Further, the company has been rewarding shareholders with consistent dividend payments 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. While the dip in average loan yields has restricted the upside in goeasy stock, this reflects a strategy to grow secured, lower-risk loans, boosting long-term stability. In addition, the prime lender’s 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 at a forward price-to-earnings ratio of 10.5. Considering its double-digit earnings growth, growing dividend, and high return on equity (ROE), goeasy stock appears a compelling choice for long-term investors.
Cargojet
Leading air cargo operator Cargojet (TSX: CJT) is another cheap stock, having the potential to deliver significant returns. The stock is currently trading about 31% below its 52-week high of $144.97. However, this drop is a buying opportunity as its fundamentals are solid and the company continues to deliver strong financial results.
The company, operating a fleet of 41 freighters, has a diversified revenue base, supported by long-term contractual agreements, which keep its business stable. These contracts provide reliable cash flows and healthy margins, even during periods of market volatility. The air cargo operator’s resilient demand for time-sensitive air freight continues to drive steady performance. Moreover, Cargojet has a solid balance sheet and remains focused on reducing leverage. Its efficient cost management across its network further supports profitability.
Going forward, strategic investments in network connectivity will position the company to grow while maintaining financial discipline. Further, its dominant role in Canada’s time-critical air freight market will ensure it benefits from higher e-commerce penetration. Moreover, with the ability to scale operations without significant incremental costs, Cargojet is well-positioned to meet rising demand while driving profitable growth.
