September and October have traditionally been volatile months for Canadian stocks. This year was no different. The S&P/TSX Composite Index dipped as much as 4.5% in early October. Yet, the Index has recovered most of those losses in the past few days.
These types of regular dips can be used to an investor’s advantage. The market falls for seemingly no good reason, and you can pick up stocks at better valuations. If I had $1,000 to buy two Canadian stocks, here are two I would be happy picking up right now.
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Topicus: A cheap software stock that could see a strong recovery (eventually)
With a market cap of $7.7 billion, Topicus.com (TSXV: TOI) is the largest Canadian stock trading on the TSX Venture Exchange. Yet almost nobody in Canada knows about this company.
It is the little brother of Constellation Software. It was spun out from Constellation in 2021 as a separate software entity. Topicus has a prime focus on Europe. Despite delivering attractive financial results, its stock has declined on concerns about the disruption of artificial intelligence (AI). While Constellation has had a decent recovery from its AI-lows, Topicus has failed to enjoy the same bounce back.
Topicus stock has underperformed in 2026. It is down 34% since the start of 2026, and down 40% over the past year.
However, that is where the opportunity is. Despite the stock falling so much, Topicus has delivered 17.5% revenue growth in its most recent quarter and 22.5% revenue growth in the quarter before that. AI does not appear to be disrupting its business.
Topicus software services are highly entrenched in regulated sectors like banking, government, and education. Its software is niche and caters to specific client needs. If anything, AI could be a net benefit as Topicus integrates it to improve and expand services for customers.
This Canadian software stock trades for only 12 times free cash flow today. That is an 8% free cash flow yield! There is some discussion about the company up-listing to the TSX Exchange to allow more institutional ownership. That could be a major catalyst for the stock. Likewise, if it continues to execute its double-digit growth, at some point the market will have to notice.
TFI: A top Canadian transport stock set for a rebound
Another Canadian stock to look at adding right now is TFI International (TSX: TFII). TFI is one of Canada’s largest transportation and trucking companies. It has operations across Canada and the United States.
It has been stuck in a very tough freight environment for the past three years. This caused the stock to decline in 2024. The good news is that the freight recession appears to be abating. TFI’s first and second quarter results this year were enough to propel the stock 64% to near all-time highs.
However, TFI’s stock has recently pulled back 27%. This looks to be a good potential buying opportunity.
TFI is a very well-managed company. This Canadian transport stock has a great record of smart management and strong capital allocation. The company has used the freight recession to improve operations, reduce overhead, and streamline processes. Not to forget that the company also bought back a lot of stock when it was depressed a year ago.
As that freight environment improves, investors should see a nice uptick in earnings. Many peers are reporting improving results. TFI stock trades with a 9% free cash flow yield, which makes it seem like an attractive opportunity now.
