The past 12 months have been exceptional for Canadian equity markets, with the benchmark S&P/TSX Composite Index gaining over 30%. Declining interest rates, improving corporate earnings, and rising commodity prices have driven this strong performance. However, the following two growth stocks have underperformed the broader market, losing significant value for various reasons. Given their solid long-term growth prospects and currently discounted valuations, I believe these two stocks present excellent buying opportunities at current levels.
Lightspeed Commerce
Lightspeed Commerce (TSX:LSPD) provides digital infrastructure to businesses across more than 100 countries, primarily serving the retail, golf, and hospitality sectors, enabling merchants to start, operate, and scale their operations. The company’s stock has been under pressure over the past year, declining by approximately 28%. Investor concerns surrounding expanding net losses and intensifying competition have weighed on the share price.
Despite this underperformance, Lightspeed’s operating metrics continue to show improvement. In its recently reported second-quarter results for fiscal 2026, the company added 2,000 customer locations, while average revenue per user (ARPU) increased 15% year over year. Supported by these gains, revenue rose 15.1% to $319 million. Although gross margin improved by 100 basis points from 41% to 42%, net losses widened to $32.7 million from $29.7 million, primarily due to higher operating expenses. Excluding one-time and non-recurring items, adjusted net income increased 11.6% to $22.2 million. Additionally, adjusted EBITDA climbed 52.1% year over year to $21.3 million.
Positive outlook
Lightspeed ended the quarter with a strong balance sheet, holding $462.5 million in cash and cash equivalents, positioning the company well to fund future growth initiatives. As omnichannel commerce adoption continues, demand for Lightspeed’s products and services remains robust. The company is also prioritizing innovation and implementing cost-optimization measures, which should support margin expansion and improved profitability over time.
Reflecting these initiatives, management expects gross profit and adjusted EBITDA to grow at compound annual rates of 15–18% and 35%, respectively, through fiscal 2028. Given its attractive valuation and solid long-term growth outlook, I believe Lightspeed is well-positioned to deliver superior returns over the next three years.
goeasy
goeasy (TSX:GSY), which provides leasing and lending services to subprime customers, is my second pick. The Mississauga-based alternative financial services company has come under significant pressure in recent months, with its shares falling more than 40% from their 52-week high. A short-seller report from Jehoshaphat Research, combined with weaker-than-expected third-quarter results, has weighed on investor sentiment.
Despite these headwinds, goeasy continues to expand its loan portfolio. In the third quarter, its loan book grew 24% year over year to $5.4 billion, supported by loan originations of $946 million. A higher proportion of secured lending and ongoing improvements in credit underwriting and collections helped reduce the annualized net charge-off rate by 30 basis points to 8.9%.
However, rising early-stage delinquencies amid uncertain macroeconomic conditions and increased use of borrower assistance programs pushed allowances for future credit losses up 21 basis points to 8.1%. Also, its adjusted earnings per share declined 5% year over year to $4.12, missing analysts’ expectations of $4.65.
Outlook
Looking ahead, a lower interest rate environment could support economic activity and increase demand for consumer credit, benefiting goeasy’s core business. The company’s expanding product suite, broader delivery network, adoption of next-generation credit models, stricter underwriting standards, and more disciplined collection practices should help improve asset quality and profitability over time.
Meanwhile, management expects the loan portfolio to reach $7.35–$7.75 billion by 2027, implying nearly 39% growth from third-quarter levels. Revenue is projected to grow at an annualized rate of 11.3%, while operating margins could expand to 43% by 2027. Despite these healthy growth prospects, the company trades at an attractive valuation, with forward price-to-sales and price-to-earnings multiples of 1.1 and 6.5, respectively. Moreover, the company has rewarded its shareholders by increasing dividends for 11 consecutive years and currently offers a forward yield of 4.9%. Considering all these factors, I believe goeasy would be an excellent buy at these levels.
