With the TSX Index soaring to new all-time highs, it is hard to find Canadian stocks that look like attractive buys right now. Mining and bank stocks have largely pushed the index higher.
However, a mix of quality stocks has significantly underperformed the index. It will take some fortitude to be a buyer, especially when these stocks are floundering and unpopular.
Yet, if you can be patient, these Canadian stocks will have their day again. If you don’t mind being a contrarian, here are three Canadian stocks I’d buy with $300 right now.
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A trucking stock ready for a momentum turnaround
TFI International (TSX: TFII) has had a tricky year. This Canadian stock is down 30% this year. The company had several consecutive tough quarters. A slowing economy has caused a freight recession in North America. President Trump’s tariffs certainly have not helped.
TFI also happened to run into some operational issues in its U.S. less-than-truckload business. It made for a perfect storm that caused the stock to rapidly drop.
Yet, there are reasons to be optimistic. TFI is an adaptable, low-cost operator. Even through some tough times, the transportation and logistics firm produced $180 million of free cash flow in the second quarter alone. It also noted operational improvements in the U.S. and modest improvements in the freight market.
Recent peer results indicate that the freight market is starting to improve. TFI may be near a trough. That is the time you want to buy a great quality compounder that is temporarily beaten down. TFI certainly thinks it’s a good time to buy; it has been aggressively buying back stock since its stock fell in February.
A European software company listed as a Canadian stock
Another no-brainer Canadian stock to buy right now is Topicus.com (TSXV: TOI). It is born out of Constellation Software, which is one of the best-performing Canadian stocks over the past 15 years (despite having declined 17% this year).
Topicus.com acquires specialized software businesses. Europe is its main market. Given the diverse array of countries, governments, industries, languages, and regulations, a vast array of software solutions are used and required. This provides a large market for Topicus to consolidate.
Topicus has already made some big moves this year. It made a big software acquisition and took a stake in its second Polish public entity. Since then, Constellation’s stock has recently pulled back and so has Topicus.com’s stock. The dip makes for an interesting chance to add this quality Canadian growth stock to your portfolio now.
A Canadian healthcare technology stock
VitalHub (TSX: VHI) is another Canadian software stock. Like Topicus, Vitalhub is very acquisitive with 22 acquisitions made to date. It has a focus on healthcare software in Canada, the U.K., the Middle East, and Australia.
The company has been putting up some very strong numbers. In the past three years, revenues have risen by a 36% compounded annual growth rate (CAGR), earnings before interest, tax, depreciation, and amortization (EBITDA) increased by a 34% CAGR, and earnings per share increased by a 145% CAGR.
The one negative is that VitalHub has aggressively raised equity to finance its growth program. That has provided close to $100 million in cash. Its stock trades at a premium multiple. So it can deploy the funds raised into acquisitions at significantly lower multiples, presenting an arbitrage opportunity.
VitalHub stock is down 6% this year and 17% in the past three months, despite good operational performance. It is not the cheapest stock. However, if it can continue delivering strong growth, it could be a good addition today.
