Canadians can leverage the Tax-Free Savings Account (TFSA) to create wealth. By sheltering both capital gains and dividends from taxes, a TFSA gives a significant boost to your real returns, especially in the long term.
One compelling strategy for TFSA investors is to look beyond the market giants and focus on mid-cap companies. These are firms with market capitalizations typically ranging from $2 billion to $10 billion, which are large enough to have proven business models and steady cash flow, yet still small enough to deliver meaningful growth. Mid-caps are generally less risky than small-caps but with more upside potential than mature large-caps.
While many mid-cap names have rallied sharply over the past year, a few still trade at attractive valuations, offering deep value. With this background, here is a Canadian mid-cap stock to buy and hold today.
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A top TSX mid-cap stock offering deep value
TFSA investors seeking a mid-cap stock offering deep value may consider Lightspeed (TSX:LSPD). The cloud-based commerce platform provider has been trading at relatively low levels, yet its unified solution positions it to capitalize on the ongoing shift toward omnichannel retailing.
While Lightspeed’s fundamentals remain solid and the company is likely to benefit from the digital shift, the stock has faced pressure amid broader macroeconomic uncertainties. Investors further punished the stock when the company opted to remain public rather than go private.
That pullback, however, may present a rare opportunity for long-term investors. The Canadian tech stock primarily serves small and medium-sized businesses, and much of its revenue is recurring. The company has also demonstrated an ability to grow revenue per customer over time, reflecting the strength and stickiness of its platform.
From a valuation standpoint, Lightspeed currently trades at a next-12-month enterprise value-to-sales (EV/Sales) ratio of approximately one, offering significant value, particularly as the company expands its footprint in key growth markets and steadily increases average revenue per user (ARPU).
Lightspeed poised to deliver significant growth
Lightspeed has multiple factors to support steady growth and a potential rebound in its share price. By focusing on retail customers in North America and hospitality clients in Europe, the company has tapped into high-potential markets and is seeing tangible results. Its expansion across these regions, coupled with rising software revenue per user (ARPU), higher payment adoption, and operational efficiency, sets the stage for solid long-term growth.
Lightspeed is targeting customers with higher gross transaction volumes (GTV). These high-value clients tend to adopt more of the company’s software modules, stay loyal longer, and contribute to increasing ARPU. In fact, the average GTV per location is expected to rise as Lightspeed secures more premium customers.
Lightspeed is also bundling its POS and payments solutions into a single, unified offering. This move has driven stronger payment penetration while helping the company maintain revenue, even as location churn persists. The combination of higher ARPU, capital revenue growth, and steady adoption of payments solutions has created a resilient revenue base.
In the most recent quarter, Lightspeed added roughly 1,700 net new customer locations across its growth markets. This expanding customer footprint opens the door to cross-selling and upselling opportunities, allowing the company to acquire customers at lower sales and marketing costs. As payment adoption continues to rise, Lightspeed is well-positioned to convert its growing customer base into sustained revenue growth.
With increasing ARPU, steady customer growth in key markets, and rising adoption of its software and payments solutions, Lightspeed is on track for solid performance. Combined with a focus on profitability and an attractive valuation, the company presents a compelling opportunity for TFSA investors seeking an attractive value stock.
