A proven strategy to generate market-beating returns is to identify undervalued stocks that have significant upside potential. In this article, I have identified two such TSX stocks that trade at a significant discount to consensus price targets in November 2025.
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Is this undervalued TSX stock a good buy?
Valued at a market cap of $93 billion, Thomson Reuters (TSX: TRI) is among the largest companies in Canada. Down almost 30% from all-time highs, the blue-chip TSX stock has returned 272% to shareholders. After adjusting for dividend reinvestments, cumulative returns are closer to 410%.
In Q3, the information services giant reported 7% organic revenue growth, with its core Big 3 segments increasing 9% as expected. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 10% to US$672 million, reflecting strong operating leverage and disciplined cost management. The Legal Professionals segment showcased momentum with 9% organic growth, accelerating from 8% in the first half of the year.
However, management pointed to three specific headwinds that will impact the top-line in the near term, which include:
- Commercial print volumes have ramped more slowly than anticipated, which will shave roughly 25 basis points off growth.
- More concerning are recent federal government contract cancellations and downgrades related to efficiency programs, creating an additional 20 basis point drag.
- The company also experienced softer bookings in its Corporate segment following internal sales reorganization changes aimed at improving cross-selling capabilities.
Management emphasized that these challenges are temporary and unrelated to its core AI innovation momentum, which continues to gain traction.
Thomson Reuters raised its margin expansion outlook to approximately 100 basis points from 50 basis points in 2026, while reaffirming organic revenue growth targets of 7.5% to 8% overall and 9.5% for the Big 3 segments.
The improved margin forecast reflects early benefits from using AI to automate internal processes and strong operating leverage. Management recently completed a US$1 billion share buyback program and maintains significant financial flexibility with net leverage at just 0.6 times EBITDA.
Analysts tracking the TSX stock forecast adjusted earnings to expand from US$3.77 per share in 2024 to US$6.16 per share in 2029. If Thomson Reuters stock trades at 30 times forward earnings, which is lower than its five-year average, it could gain over 30% within the next three years. If we adjust for dividends, cumulative returns could be closer to 35%.
Is this TSX tech stock a good buy?
Valued at a market cap of $10.2 billion, Descartes Systems (TSX: DSG) has returned more than 400% to shareholders over the last 10 years. Despite these outsized returns, the tech stock is down 32% from all-time highs.
Descartes Systems delivered record quarterly results in fiscal Q2 (ended in July) with revenues climbing 10% to US$179.8 million. The logistics software provider saw adjusted EBITDA surge 14% to US$80.2 million, indicating a healthy margin of 45%.
The company’s Global Trade Intelligence business experienced robust demand as customers sought access to real-time tariff databases and competitive intelligence tools to make better import classification decisions.
Management noted that as the tariff environment grows more complex with frequent changes and country-specific arrangements, demand for these solutions accelerates rather than diminishes.
Looking ahead, Descartes provided baseline guidance suggesting continued momentum with expectations for approximately US$157.5 million in third-quarter revenues. The company completed two acquisitions during and immediately after the quarter, adding PackageRoute and Finale Inventory to expand capabilities in e-commerce and inventory management.
With over US$200 million in cash and a US$350 million undrawn credit facility, Descartes remains well-positioned to pursue additional deals in a market where private equity competition has diminished significantly.
Analysts tracking the tech stock forecast adjusted earnings to expand from US$1.70 per share in fiscal 2025 to US$4.40 per share in fiscal 2030.
Descartes stock is priced at 34 times forward earnings, which is higher than its three-year average of 48 times. If we assume a forward earnings multiple of 30 times, it could return over 50% within the next four years.
