2 Wonderful TSX Businesses You’ve Probably NEVER Considered for Your TFSA

TFSA investors should reconsider Badger Daylighting Ltd. (TSX:BAD) and one other growth gem.

| More on:

It’s hard to keep up to date with all the top TSX-traded businesses out there. That’s why I’d strongly encourage you to keep a watch list or radar of compelling stocks that you’d be interested in owning if ever it traded at a substantially lower price, so you don’t miss out on a dip you would have bought if you hadn’t completely forgotten about the name.

With the mainstream financial media neglecting to cover small-cap stocks with lower trading volumes, it’s not a mystery as to why so many strong up-and-comers end up flying under the radar, as we’re distracted by overcovered names that may not be as attractive or timely at a given instance in time.

Consider Badger Daylighting (TSX:BAD) and Tucows (TSX:TC)(NYSE:TCX), two undercovered Canadian stocks that you’ve either never heard of or have completely forgotten about due to the lack of coverage that each name gets from the analyst community and the mainstream financial media.

These stocks, while small fish in an ocean of whales, deserve your attention, so after the recent pullback in small-cap stocks, you may want to revisit (or discover) these solid businesses, which have the potential to become huge winners for a long-term-focused TFSA portfolio.

Without further ado, let’s have a brief look into each “easily forgotten” stock.

Badger Daylighting 

If you’re like me, you’ve probably stopped following the company after the infamous short-seller Marc Cohodes set his sights on the Badger, the hydrovac excavator, alleging that the company had been engaged in shady accounting practices and illegal dumping, among other issues.

To the surprise of many, Cohodes’s claims were deemed as baseless by a third-party, and the Badger eventually bit Cohodes back with a request for a cease-trade order (to get Cohodes to “shut up”), which was eventually denied by the ASC.

Cohodes is still in a bitter battle with Badger, and as that unfolds in the background, the company has been performing remarkably well and is one of the few stocks that’s in the green for 2018.

In the latest quarter, Badger clocked in a 20% increase to revenue, and a 57% increase to EPS thanks to a number of improvements that fellow Fool Karen Thomas did a top-notch job of covering in a prior piece. Given Badger’s momentum and its modest valuation, Karen thinks Badger is a steal, and I’d have to agree, even if Cohodes does return with more nasty things to say about the company.

Tucows

Here’s an underrated stock that blasted off over the last month, as other stocks have crumbled like a paper bag. Back in November, I’d encouraged investors to buy the stock, touting the company as the perfect mix of stability and growth.

Tucows’s domain business served as a foundation with Ting, the mobile and internet business, serving as the major source of long-term growth. As management continues to capitalize on the rollout of fibre internet and low-cost wireless services across select markets within the U.S., Tucows has the opportunity to command high double-digit top-line growth numbers with minimal volatility relative to other companies growing at the same pace.

There’s no question that the domain business has been challenged of late thanks to increased competition in the space, but with an extremely agile, low-cost growth outlet in Ting, it definitely appears that Tucows can weather the storm (and then some) as its domain business stabilizes.

Over the last decade, Tucows has seen its top line accelerate, and with an incredibly high-growth ceiling with Ting, I think the company’s best days could be ahead of it. Given the magnitude of growth and the stable backdrop of the domain business, I believe Tucows is a growing cash cow that you won’t want to miss.

Double-digit top-line growth numbers for just 28 times trailing earnings? That’s a steal, plain and simple.

Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. Tom Gardner owns shares of Tucows. The Motley Fool owns shares of Tucows. Badger Daylighting is a recommendation of Stock Advisor Canada.

More on Investing

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

stock research, analyze data
Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

There are opportunities and risks on the horizon for the Canadian banks.

Read more »

Young Boy with Jet Pack Dreams of Flying
Stock Market

Is Air Canada Stock a Good Buy After Its Q3 Results

Down almost 60% from all-time highs, Air Canada is an undervalued TSX stock that remains an enticing investment in November…

Read more »

cloud computing
Investing

Where to Invest $10,000 in November

Given their solid underlying businesses and healthy growth prospects, I expect these two defensive stocks to outperform uncertain outlook.

Read more »

coins jump into piggy bank
Retirement

Here’s the Average RRSP Balance at Age 44 for Canadians

Holding stocks like Alimentation Couche-Tard (TSX:ATD) in an RRSP is a good way to build your wealth.

Read more »

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »