The Canadian stock market has been on an impressive run this year, with the benchmark index climbing more than 20% year to date. This rally comes despite ongoing geopolitical tensions and broader macroeconomic uncertainties. A catalyst behind this surge has been the steady decline in interest rates. Moreover, the economy’s surprising resilience has helped lift TSX-listed stocks across sectors.
However, several high-quality Canadian companies, with solid fundamentals and long-term growth prospects, have seen their share prices pull back from recent highs. This short-term dip provides an opportunity to buy and hold these stocks.
Against this backdrop, here are two TSX stocks to buy today and hold for the next five years for outsized returns.
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goeasy stock
goeasy (TSX:GSY) stock has dipped about 26% from its 52-week high after a report by Jehoshaphat Research accused the lender of accounting manipulation and hiding credit losses. The company rejected the claims as “false and malicious” and reaffirmed its 2025 outlook, which helped stabilize investor sentiment.
Notably, goeasy has been consistently performing well. Over the past five years, goeasy’s revenue has grown at a 22.7% compound annual rate, with earnings rising even faster thanks to operating efficiency and steady credit performance. Moreover, the subprime lender has paid dividends for 21 consecutive years and raised them annually for the past 11 years.
Looking ahead, management expects the loan portfolio to expand to as much as $7.75 billion by 2027. An expansion in the consumer loan portfolio will drive its revenue at a solid pace. While a gradual shift toward more secured lending will lead to a slight decline in yield, it should lower risk while sustaining profitability. Its leadership in the Canadian subprime lending market, geographic expansion, high demand, a diversified funding base, and operating efficiency position it well to deliver double-digit growth in the coming years.
Further, goeasy stock is trading at eight times forward earnings and yielding over 3.6%. Considering its double-digit earnings growth and decent yield, goeasy stock looks undervalued near the current levels.
MDA Space stock
MDA Space (TSX:MDA) is a strong long-term investment despite recent volatility. The stock has dropped more than 27% from its 52-week high after EchoStar unexpectedly cancelled a major satellite contract and sold its spectrum licenses to SpaceX. Yet, this pullback seems more like a temporary setback than a reflection of the company’s future potential.
The fundamentals remain solid. MDA Space has a robust $4.6 billion backlog that ensures visibility into future revenue growth, even without the EchoStar deal. Management has reaffirmed its full-year outlook, signalling confidence in ongoing operations. The company’s core divisions, including Satellite Systems, Robotics & Space Operations, and Geointelligence, are well-positioned to benefit from growing government and private investment in satellite communications, defence, and earth observation.
This space technology company’s diversified portfolio and cost-efficient solutions give it an edge over competitors. Moreover, its healthy balance sheet and focus on innovation position it well to capture a growing share of the rapidly expanding space economy.
The bottom line
goeasy and MDA Space are high-quality Canadian companies with strong fundamentals and significant growth potential. The recent dip in their price provides an attractive buying opportunity for medium to long-term investors. Buying and holding these stocks over the next five years could generate solid total returns.
