I usually don’t pay too much attention to stocks simply because they’ve fallen sharply in price. After all, a struggling business can continue losing value even after its shares appear inexpensive. But sometimes, you’ll find a stock that has struggled in the market despite the company’s promising long-term growth opportunities, making it look undervalued.
In this article, I’ll highlight one heavily discounted Canadian growth stock and explain why its improving order momentum and turnaround efforts could make it an attractive long-term investment.
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An undervalued Canadian stock to buy right now
One Canadian stock I’d seriously consider buying after its steep decline is ATS Corporation (TSX: ATS). This Cambridge-based automation solutions provider helps businesses improve manufacturing efficiency and productivity across industries like life sciences, food and beverages, industrial manufacturing, and energy.
ATS stock has lost 49% of its value over the last six months alone. With this, it currently trades at $24.49 per share with a market cap of about $2.4 billion. As a result, its shares are now trading roughly 50% below their 52-week high and close to their 52-week low.
Why has ATS stock fallen so sharply?
The recent weakness in ATS stock largely reflects its slowing revenue growth, pressure on profitability, and uncertainty surrounding customer investment decisions. However, the company’s latest financial results showcased that there could be more to this beaten-down Canadian stock’s long-term growth prospects.
In the second quarter of its fiscal year 2027 (ended in September), ATS registered an 8.6% year-over-year (YoY) decline in revenue to $665.8 million. This weakness was mainly driven by lower GLP-1-related activity and softer demand in some of its non-life sciences businesses. While the company’s industrial and consumer revenue fell 23.5% YoY, its food and beverage revenue slipped 20.2%. On the positive side, ATS’s energy revenue surged 45.1% YoY, backed by strong nuclear project activity.
Despite these challenges, ATS generated $62.5 million in quarterly free cash flow, sharply higher than $10.2 million a year ago. Its services revenue also climbed over 6% YoY to $179.1 million, highlighting a key area of growth.
Why ATS could be a bargain right now
What makes ATS worth considering after such a massive selloff is that its underlying business continues to show signs of healthy customer demand, even as near-term earnings remain under pressure.
For example, ATS secured $827 million in new orders during the latest quarter, reflecting a 12.7% YoY increase and 26.1% sequential growth. Strong demand for medical devices and radiopharmaceutical solutions also pushed its life sciences order backlog to a record high. Overall, the company ended September with roughly $2 billion in order backlog, providing a solid base for future revenue.
Beyond improving orders, ATS is actively working to strengthen its profitability. With its ongoing fixed-cost transformation program, the company expects to generate $65 million to $75 million in annual savings. Meanwhile, expanding its higher-margin aftermarket services and capitalizing on growing opportunities in nuclear energy and radiopharmaceuticals could support its long-term earnings growth.
Is ATS stock worth buying now?
Despite the attractive long-term growth opportunities, investors shouldn’t overlook the challenges that have pushed ATS stock to its current discounted price.
Customer order delays and tariff-related uncertainty recently forced ATS to withdraw its earlier fiscal 2027 revenue growth and margin expansion targets.
Nevertheless, with improving order momentum and meaningful cost-saving initiatives underway, ATS stock’s sharp decline could be offering long-term investors an attractive entry point. If the company successfully converts its growing opportunities into stronger earnings, its shares could deliver really impressive returns over the coming years.
