After the TSX recently corrected, there are some decent opportunities investors can take advantage of. If you have $1,000, here is a small-cap, mid-cap, and large-cap stock to buy on the TSX right now.
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A top TSX defence stock
Calian Group (TSX: CGY) is a great small-cap stock to buy with $1,000. At a price of $80.60 today, it trades with a market cap of $929 million. Calian provides healthcare, training, cybersecurity, and satcom/technical services to government and private providers.
With Canada spending billions to bolster its defence capabilities, Calian is focusing on its defence growth strategy. As Canada’s defence force grows, Calian should naturally get its share of larger contracts.
The company has been entrenched with NATO and the Canadian military for years. As an incumbent and trusted service provider, it has a solid stake in the growth of Canada’s capacities.
Last quarter, Calian grew revenues by 20% and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 35%. As Calian scales, its margins are expected to improve. Calian has a strong $1.4 billion backlog to support continued growth in the year ahead.
Calian stock is up 43% this year. Yet it trades at only 18 times earnings and 14.5 times cash flow. Given it could grow by about the same rate, it looks like a good growth-at-a-reasonable-price (GARP) stock.
A fast-growing Canadian retailer
A mid-cap stock that looks cheap today is Group Dynamite (TSX: GRGD). With a price of $52 today, it has a market cap of $5.37 billion.
Group Dynamite operates women’s clothing chains Garage and Dynamite. It has 307 stores across Canada, the U.S., and the U.K., where it recently entered the market. While clothing can be a very fickle business, Group Dynamite is extremely adaptable.
Firstly, it is very profitable and generates substantial cash flows. It earns ~40% EBITDA margins on sales, which is really exceptional in the industry. Secondly, it churns its inventory 9.85 times per year. This means it doesn’t sit on stagnant inventory and has a very low markdown rate. It can quickly adapt to changing consumer preferences, while protecting margins.
The company continues to reposition its portfolio to better-producing locations. It still has room to grow in the U.S., the U.K., and even broader Europe.
Despite a great long-term outlook, this TSX stock only trades for 14 times earnings. Certainly, the stock is subject to volatility based on the macro environment. If that doesn’t bother you, it is a really attractive buy today.
A top TSX transport stock
TFI International (TSX: TFII) is the TSX large-cap stock pick for today. With a price of $175 per share, TFI has a market cap of $14 billion.
TFI operates a diversified transport and logistics business across Canada and the United States. It is a really well-managed business focused on efficient operations and serial acquisitions. TFI just delivered a great quarter where diluted earnings per share rose 41% to $1.65. It produced $255 million of operating cash in the quarter!
Recent trade war and tariff news has set the market jittery on this name. That could be an opportunity if you can look beyond some of these near-term concerns. At only 17 times forward earnings, TFI looks like a compelling price at these levels.
