It may be challenging to identify undervalued stocks at present, given that the broader markets are trading near all-time highs in September 2025. However, if you look closely, several mid- and small-cap TSX stocks are currently trading at an attractive valuation.
In this article, I have identified two top undervalued TSX stocks I’d buy right now.
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Is this TSX stock a good buy?
Valued at a market cap of $533 million, Computer Modelling Group (TSX: CMG) is down 56% from record levels. Computer Modelling Group is a Calgary-based software and consulting company that develops reservoir simulation and seismic interpretation software for the oil and gas industry.
It offers specialized tools, such as IMEX, GEM, and STARS, for modelling oil recovery processes in both conventional and unconventional reservoirs, along with optimization solutions that utilize machine learning and statistical analysis.
Computer Modelling Group faces headwinds in 2025 despite its ambitious acquisition strategy under CEO Pramod Jain’s leadership. The reservoir simulation software company reported a 3% year-over-year decline in revenue in fiscal Q1 2026. Moreover, organic sales were down 15% in the June quarter.
CMG’s core reservoir simulation business, which has historically generated strong cash flows with 40%-plus EBITDA (earnings before interest, tax, depreciation, and amortization) margins, experienced meaningful setbacks.
Its adjusted EBITDA fell 26% to $7.1 million, with margins compressing to 24% from 31% in the prior year. A major customer loss to aggressive competitor pricing further pressured results, highlighting vulnerability in CMG’s traditionally sticky customer relationships.
Jain’s “CMG 4.0” strategy aims to transform the company into a platform consolidator through acquisitions in seismic interpretation software.
Since 2022, CMG has deployed $73 million to acquire Bluware, Sharp Reflections, and recently Seisware, adding $50 million in revenue. Analysts forecast sales to rise from $129.5 million in fiscal 2025 to $247 million in fiscal 2030.
In this period, free cash flow is projected to expand from $28.5 million to $86 million. If the TSX stock is priced at 12 times forward FCF, which is a reasonable valuation, it should gain more than 90% over the next four years.
Is this TSX stock undervalued?
Valued at $3 billion by market cap, TerraVest Industries (TSX: TVK) is a Canadian manufacturing company that produces specialized equipment and services across four main segments.
- The HVAC Equipment division makes residential and commercial fuel tanks, furnaces, boilers, and air conditioning systems.
- The Compressed Gas Equipment segment manufactures storage, distribution, and dispensing equipment for various gases, including propane, natural gas, and carbon dioxide, serving gas distributors and energy companies.
- The Processing Equipment division produces wellhead equipment, biogas systems, water treatment technology, and custom process equipment for oil and gas producers and utilities.
- The Service segment provides water management, environmental services, heating, rentals, and well services.
TerraVest serves diverse markets, including agriculture, mining, energy, chemicals, utilities, transportation, and construction, across Canada, the United States, and internationally.
Over the last decade, the TSX stock has returned nearly 3,000% to shareholders, outperforming the broader market by a wide margin. Analysts forecast TerraVest to increase sales from $912 million in fiscal 2024 (ended in September) to $2.1 billion in fiscal 2027. During this period, adjusted earnings are forecast to increase from $3.30 per share to $7.13 per share.
If the TSX stock is priced at 30 times forward earnings, which is reasonable, given its growth estimates, it should trade at $214 in September 2026, indicating an upside potential of 55% from current levels.
