The Canadian benchmark index has risen by over 22.5% year-to-date, despite the presence of macroeconomic uncertainties. The declining interest rates and resilience shown by the economy have pushed TSX stocks across sectors higher. However, for investors seeking value, opportunities still exist, as several fundamentally solid Canadian companies remain undervalued. For investors with a long-term investment outlook, these shares offer a solid buying opportunity.
With this backdrop, here are two undervalued Canadian stocks primed for big returns.
Undervalued stock #1
Cargojet (TSX: CJT) is one of the top TSX stocks that is significantly undervalued relative to its current market price. Shares of Canada’s leading air cargo operator have slipped over 38% from its 52-week high of $144.97 and are down about 32.5% over the last year. Nonetheless, the company’s fundamentals remain strong, suggesting it could deliver stellar returns for investors with a long-term outlook.
The recent headwinds for Cargojet have emerged from macroeconomic uncertainty and trade-related challenges. Yet the company continues to find growth opportunities, particularly through ACMI partnerships with DHL. Additionally, the upcoming holiday shopping season is likely to provide a further boost, as Cargojet benefits from the surge in e-commerce and retail shipping demand.
Cargojet’s first half of 2025 reflected strong growth across both domestic and charter operations. The company’s disciplined cost management, focus on reducing debt, and strategic network expansion further enhance its growth outlook. Importantly, long-term contracts with minimum volume guarantees and inflation-linked pricing provide steady cash flows, add stability, and safeguard margins. These agreements account for roughly three-quarters of Cargojet’s domestic revenue, making the business more resilient to market fluctuations.
Looking ahead, Cargojet’s dominant position in time-sensitive domestic freight, combined with ongoing e-commerce tailwinds, positions it well for continued growth. Its operational freighters provide both scale and flexibility, enabling expansion without the high costs of fleet acquisition. Overall, for investors seeking an undervalued stock with strong fundamentals, stable cash flows, and growth potential, Cargojet presents a compelling opportunity.
Undervalued stock #2
Lightspeed Commerce (TSX: LSPD) is another undervalued stock poised to deliver significant returns. Shares of this Canadian tech firm have declined by about 24% this year due to macroeconomic uncertainties. Moreover, the company’s decision to stay public rather than go private further disappointed investors.
Nonetheless, the stock has begun to show some recovery. However, it still trades at a next 12-month enterprise value-to-sales (EV/sales) multiple of one. This valuation appears low and attractive, given its solid fundamentals, growing scale, focus on profitability, and expansion into new customer locations in growth markets.
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 tech giant is making steady progress in its core growth markets and is moving towards profitability with adjusted free cash flow nearing breakeven. Further, its customer locations are increasing, while its average revenue per user (ARPU) is trending higher, indicating that its platform is gaining traction. This is likely to give a boost to its stock price.
The commerce platform’s strategy to expand its North American retail presence and grow within the European hospitality sector is driving customer growth and improving margins. Furthermore, its growing capital business and expansion of Lightspeed Payments are expected to boost margins in the quarters ahead, supporting its share price.
