2025 was an interesting year for stock market investors with plenty of ups and downs. Toward the end of the year, the stock market ended on a high note. As of this writing, the S&P/TSX Composite Index is up by almost 30% from 12 months ago, hovering around new all-time highs. The benchmark index for the Canadian stock market paints a pretty picture of the stock market. However, not every stock climbed to new heights during the bull market conditions.
The market has continued its solid momentum, but a few laggards have yet to soar to greater heights. Today, I will discuss two TSX stocks that have also started recovering to better levels, but have the potential for much more.
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Telus
Telus Corp. (TSX:T) might be as contrarian a pick as it can get for many stock market investors. The $29.1 billion market-cap TSX telecom stock is a world-leading communications technology company. It is one of Canada’s Big Three telcos and has suffered a lot at the hands of circumstances out of its control.
The stock took a beating when the Bank of Canada aggressively increased key interest rates to combat inflation. While rate cuts began in 2024 and continued in 2025, the development didn’t spur any positive price movement for the stock. The company’s management decided to hold dividend increases and focused on debt reduction to improve its financials.
While the company continues reducing its debt and improving its position, it might be ripe for the picking. As of this writing, the stock trades for $18.81 per share, down by 19.3% from its 52-week high.
Algonquin Power & Utilities
Algonquin Power & Utilities Corp. (TSX:AQN) is another stock that suffered similar consequences due to higher key interest rates. Capital and debt-intensive businesses like AQN felt the weight of the interest rate hikes. Share prices fell from around $15 per share in the summer of 2022, all the way down to below $6 in late 2023. It is recovering right now, but there is plenty more recovery to be had with the share prices.
As of this writing, the $6.8 billion market-cap utility stock trades for $8.82 per share, still at a significant discount from its 2022 highs. The company had too much debt on its balance sheet. The surge in interest expenses triggered the slashing of its dividends to preserve cash flow. The upset led to a sell-off that has yet to fully subside.
While it might no longer have the track record of delivering generous dividend hikes for years, it can be a good rebound story to leverage in your self-directed investment portfolio.
Foolish takeaway
Telus and Algonquin Power stock look well-positioned to continue their respective recoveries on the stock market. However, it is important not to forget that turbulence is still on the cards.
There are plenty of moving parts and macroeconomic factors that can trigger short-term volatility in the market. If you have a buy-and-hold mindset aligning with a long investment horizon, these two can be good additions to your self-directed portfolio.
