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.
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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.
