2 Value Stocks With Solid Upside Potential

These Canadian corporations continue to deliver solid financials, while their shares are trading at a significant discount.

| More on:

With the recent correction in the market, several Canadian stocks are offering great value. However, investors should take caution, as there could be good reasons why a stock is down. Thus, investors looking for value bets should consider adding shares of the companies that have witnessed a decline but continue to expand their business rapidly. Let’s look at two Canadian corporations that continue to deliver solid financials, and their shares are trading at a significant discount. 

WELL Health

The economic reopening and general selling in the market wiped out a significant amount of value from WELL Health Technologies’s (TSX:WELL) market cap. For instance, WELL Health stock is down over 41% from its 52-week high. The pandemic accelerated the demand for the services and products of this digital healthcare company. However, fears of a slowdown in growth amid the easing of lockdown measures led investors to offload WELL Health stock. 

Despite tough comparisons and economic reopening, WELL Health continues to grow rapidly, which is reflected through its stellar financial performance and higher patient visits. WELL Health announced 573% year-over-year growth during the last reported quarter. Meanwhile, its omnichannel patient visits more than doubled and reached 700,359. 

It’s worth noting that WELL Health has consistently delivered positive adjusted EBITDA over the past several quarters. Moreover, it remains on course to deliver profitable growth in 2022, which could boost its stock

The continued momentum in its organic revenue and benefits from acquisitions are likely to drive its financials. Moreover, strength in the U.S. business, growing omnichannel patient visits, and an extensive network of outpatient medical clinics will likely accelerate its growth and support its stock price. Further, WELL Health stock is trading at a forward EV/sales multiple of three, which is at a multi-year low and provides a solid entry point. 

Lightspeed

Lightspeed (TSX:LSPD)(NYSE:LSPD) has bounced back from its lows and is up about 31% in one month. Despite the recent recovery, Lightspeed Commerce stock is still down about 75% from its highs and offers significant value at current levels. 

A short report on Lightspeed stock and slowdown in growth amid economic reopening led investors to dump its stock. Nevertheless, Lightspeed continues to deliver stellar growth, reflecting benefits from acquisitions and higher organic sales.  

Notably, Lightspeed’s revenues increased by 165% during the last reported quarter, reflecting benefits from recent acquisitions and solid organic growth. Moreover, its customer base continues to expand, which is positive. 

The ongoing digital shift, product expansion, and higher payments penetration augur well for growth. Moreover, expansion into high-growth markets, strategic acquisitions, and adoption of its multiple modules by existing customers will likely accelerate its growth. 

Due to the correction in its price, Lightspeed stock is trading at an EV/sales multiple of 5.8, which compares favourably to its historical average and reflects a steep discount. 

Bottom line

Shares of WELL Health and Lightspeed are trading at an attractive discount and offer solid value at current levels. Further, both these Canadian corporations continue to grow their financials rapidly and have multiple growth vectors that would support the recovery in their stocks.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce.

More on Tech Stocks

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

happy woman throws cash
Tech Stocks

3 Growth Stocks That Could Be Long-Term Wealth Creators

These three growth stocks aim to grow their financials at a higher rate than the industry average, thus delivering superior…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is POET Technologies a Top AI Stock for Canadian Investors?

Canada has relatively few AI stocks, and the ones it has are different from American AI stocks in terms of…

Read more »

Rocket lift off through the clouds
Tech Stocks

2 Growth Stocks That Could Skyrocket in 2025 and Beyond

Wondering what types of stocks could rapidly rise in 2025? Check out these two stocks with substantial upside if they…

Read more »

up arrow on wooden blocks
Tech Stocks

The 3 Smartest Tech Stocks to Buy With $500 Right Now

Tech stocks can be seen as a bit risky, but these three have far less risk and more stability for…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

Shopify: A Must-Have Growth Stock for Your TFSA Now (and the Next 10 Years)

Shopify (TSX:SHOP) stock isn't just a top growth company, it's a titan worth owning in your decades-long TFSA fund.

Read more »

cloud computing
Tech Stocks

Best Stock to Buy Right Now: Manulife vs CIBC

Want the best stocks? These two are certainly the best options. But which is the better buy?

Read more »

profit rises over time
Tech Stocks

4 Reasons to Buy Constellation Software Stock Like There’s No Tomorrow

Constellation Software stock continued its climb upwards after recent earnings, and this only adds to its appeal.

Read more »