1 Magnificent TSX Stock Down 31% to Buy and Hold Forever

With improving financials, strong long-term demand, and a record backlog, this TSX stock could be one of the best bargains on the market right now.

| More on:
diversification and asset allocation are crucial investing concepts

Source: Getty Images

Key Points

  • NFI Group (TSX:NFI), down 31% from its recent highs, offers long-term potential with its robust EV-focused backlog.
  • Despite recent earnings pressure, NFI’s over US$13 billion order backlog signals strong demand for electric buses.
  • As a key player in public transit electrification, NFI’s growth prospects remain solid for patient investors.

While the TSX Composite Index has jumped 23% so far in 2025 and is currently trading near record levels, many fundamentally strong stocks have still been left behind in the rally. At times, lagging stocks are doing everything right behind the scenes but get overlooked due to short-term challenges.

And that’s where the real opportunities show up for long-term investors, especially when a well-managed company with improving financials, a massive backlog, and exposure to a long-term trend like electric vehicles (EVs) is down close to 30% from its 52-week highs.

That’s exactly what’s happening with NFI Group (TSX:NFI). Despite multiple positives, NFI stock has struggled in the past three months. But there’s more to this story than just the stock chart. Let’s find out what’s happening at NFI of late and why I still see it as a magnificent TSX stock that could be worth buying and holding for the long run.

Why NFI stock has struggled lately

Over the last three months, NFI stock has fallen sharply, largely due to weaker-than-expected earnings in the second quarter. The company has faced temporary pressures around inflation, supply chain disruptions, and order delays, which have weighed on its margins and sentiment, even as its underlying business continues to strengthen.

In fact, most of these headwinds are already easing, with NFI recently confirming better parts availability and improving production flow. That’s why I think by focusing solely on short-term challenges rather than long-term momentum, investors may be missing the forest for the trees.

Order backlog points to growing demand

One of NFI’s most impressive strengths remains its massive US$13 billion-plus order backlog. It clearly reflects growing global demand for electric and low-emission buses, a market that’s expected to expand further over the next decade as transit firms and governments shift toward cleaner transportation.

Notably, the company continues to win high-value contracts across Canada, the U.S., and the U.K., giving it solid visibility into future revenue and production. I see this solid order pipeline as a signal that NFI is executing well behind the scenes.

Strong tailwinds in the EV transition

NFI is one of the few Canadian firms with direct exposure to the electrification of public transit, which is a multi-decade trend supported by policy, funding, and environmental mandates. The company is already delivering zero-emission buses at scale, and it’s well-positioned to grow as more cities modernize their fleets in the years to come.

Meanwhile, NFI is also taking steps to strengthen its balance sheet, reduce debt, and improve liquidity. The company raised capital in 2023 and has since improved its cash flow position through better inventory management and cost control.

As its production ramps up further and deliveries catch up to orders, NFI’s margins are expected to recover sharply and boost its earnings.

At this price, the risk/reward tradeoff looks really attractive

At the time of writing, NFI stock was trading at $13.73 per share with a market cap of $1.6 billion. Despite the stock falling sharply in recent months, the company’s long-term growth prospects are backed by a large order book, improving operations, and exposure to the EV trend.

That’s why, at current levels, NFI offers an attractive entry point for long-term investors, in my opinion. While the stock may see volatility in the near term, its long-term story remains intact — and arguably stronger than ever.

Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool recommends NFI Group. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

ETF stands for Exchange Traded Fund
Dividend Stocks

Is the Average TFSA and RRSP Enough at Age 65?

Feeling behind at 65? Here’s a simple ETF mix that can turn okay savings into dependable retirement income.

Read more »

cautious investors might like investing in stable dividend stocks
Stocks for Beginners

Where Will Dollarama Stock Be in 3 Years?

As its store network grows across continents, Dollarama stock could be gearing up for an even stronger three-year run than…

Read more »

Child measures his height on wall. He is growing taller.
Dividend Stocks

2 Dividend Stocks to Create Long-Term Family Wealth

Want dividends that can endure for decades? These two Canadian stocks offer steady cash and growing payouts.

Read more »

GettyImages-1394663007
Stocks for Beginners

This Recession-Resistant TSX Stock Can Last for a Lifetime in a TFSA

TD Bank’s steady, recession-ready business could turn your TFSA into reliable, tax-free income for decades.

Read more »

customer uses bank ATM
Stocks for Beginners

1 Canadian Dividend Stock I’d Trust for the Next Decade

Looking for a “just right” dividend? Royal Bank’s scale, steady profits, and disciplined risk make its payout one you can…

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada
Stocks for Beginners

The Year Ahead: Canadian Stocks With Strong Momentum for 2026

Discover strategies for investing in stocks based on momentum and sector trends to enhance your returns this year.

Read more »

man looks worried about something on his phone
Dividend Stocks

Is BCE Stock (Finally) a Buy for its 5.5% Dividend Yield?

This beaten-down blue chip could let you lock in a higher yield as conditions normalize. Here’s why BCE may be…

Read more »

stocks climbing green bull market
Stocks for Beginners

1 Elite Canadian Stock Down 34% to Buy and Hold Forever

A temporary pullback has created a long-term buying opportunity in one of Canada’s most resilient logistics stocks.

Read more »