Investing in quality growth stocks that trade at a compelling valuation is a proven strategy to help you generate market-beating returns over time. In this article, I have identified two such TSX stocks that you should consider owning right now with $3,000.
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Is this TSX stock undervalued?
Valued at a market cap of $723 million, VitalHub (TSX: VHI) provides healthcare technology solutions, including patient flow optimization, electronic health records, case management, and workforce automation software.
It serves hospitals, long-term care facilities, and community health organizations across multiple countries with platforms that streamline operations, patient journeys, and compliance management for health and human service providers.
In the second quarter (Q2), VitalHub reported annual recurring revenue of nearly $80 million, a 55% year-over-year increase. It also ended Q2 with a healthy adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 26%.
The healthcare technology company added $1.9 million in organic ARR during the quarter, which indicates continued momentum in its core business despite integration challenges from recent acquisitions.
VitalHub’s aggressive acquisition strategy has accelerated growth, but it has also created near-term margin pressure. Four significant acquisitions over the past six months, including MedCurrent, Strata, Induction Health, and Novari, have impacted profitability as management works to integrate and right-size these businesses.
CEO Dan Matlow acknowledged that Induction Health, acquired from a publicly traded company, requires substantial restructuring to eliminate excessive costs.
VitalHub’s revenue mix shows strong recurring characteristics, with 83% coming from term licenses, maintenance, and support. The Novari acquisition provides comprehensive Canadian market coverage and strong relationships with major partners like Cerner. Management expects this acquisition to drive significant ARR growth in 2026-2027.
Analysts tracking the TSX stock forecast revenue to rise from $68.6 million in 2024 to $135 million in 2027. In this period, VHI stock is estimated to expand adjusted earnings from $0.11 per share to $0.43 per share.
If VHI stock is priced at 30 times forward earnings, which is quite reasonable, it will trade around $13 in early 2027, indicating an upside potential of almost 15%.
Is this small-cap stock a good buy?
Valued at a market cap of $250 million, Tornado Infrastructure Equipment (TSXV:THG) designs, fabricates, manufactures, and sells hydrovac trucks in North America. The company offers heavy machinery, specialized tools, and technology-driven solutions targeting road construction, urban development, and utility maintenance sectors.
It serves excavation service providers in the municipal and oil and gas markets. Tornado generates revenue through equipment sales, leasing, and service contracts, with long-term service agreements providing consistent income streams.
Tornado’s key growth initiatives focus on geographic expansion into markets like Southeast Asia, developing eco-friendly equipment, forming strategic partnerships with construction firms and government agencies, and enhancing service offerings through comprehensive maintenance and training programs.
It is leveraging technology through IoT integration and data analytics to provide real-time monitoring, predictive maintenance, and optimized performance, positioning itself to attract tech-savvy clients while improving operational efficiency and customer satisfaction.
Analysts tracking the TSX stock forecast revenue to increase from $137 million in 2024 to $258 million in 2027. In this period, adjusted earnings are forecast to grow from $0.07 per share to $0.16 per share.
If Tornado stock is priced at 25 times earnings, it should trade around $4 in early 2027, indicating an upside potential of over 100% from current levels.
