After the TSX Index soared by over 20% in 2024, it has become harder to find cheap or even fairly valued individual stocks. Consequently, investors need to be shrewd about how they invest in 2025.
Fortunately, there are stocks and market segments that have not benefitted from the momentum tailwinds of 2024. The good news is you can pick these stocks up at multi-year valuation lows.
Given their attractive valuations, these stocks could be primed for good long-term returns as valuations revert to the mean. Here are three stocks that could supply good value in 2025.
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A value-priced compounder
Calian Group (TSX:CGY) has been a laggard for a couple of years. It has had a few inconsistent quarters where earnings missed guidance.
Yet, when you look at its five-year results, it hasn’t been that bad. Revenue has risen by a 17% compounded annual rate over the past three years. EBITDA (earnings before interest, tax, depreciation, and amortization) has increased by a 23% compounded annual rate.
Recent acquisitions have helped to bolster margins, expand its product/service mix, and globally diversify its customer base. It continues to look to grow both by acquisition and organically.
Calian stock is in the penalty box. Yet, if it can demonstrate an ability to beat 2025 guidance, it could start to catch a bid again.
Calian yields 2.2% today. It trades with a price-to-earnings ratio of only 10. It is likely to grow by a faster rate in 2025, indicating a good value-to-growth ratio.
An undervalued real estate stock
Real estate is another great place to find value today. Many real estate investment trusts (REITs) are trading at multi-decade low valuations. That is despite interest rates coming down and fundamentals remaining good.
One REIT that appears to be undervalued is BSR REIT (TSX:HOM.UN). The REIT performed very well in the first half of the year, but the stock subsequently declined into 2025. That could create an opportunity.
BSR operates 100% in the United States. If you are worried about a further decline in the Canadian dollar, this is a great hedge. BSR has a high-quality portfolio of garden-style apartments in top American growth regions like Houston, Dallas, and Austin.
BSR has been delivering high single-digit cash flow per unit growth. Given its depressed stock price, the REIT has been buying back a lot of units. This stock trades at a wide discount to U.S. peers and at a wide discount to its net asset value. You snap up a 4.9% distribution yield if you buy today.
A TSX stock for income and value
goeasy (TSX:GSY) is another stock to buy if you want growth, income, and value. goeasy is a leading non-prime lender in Canada. With the economy weakening, the market has become skeptical about goeasy’s growth.
The good news is the company is very good at what it does. It is a very prudent underwriter of loans. It has been focusing on only its highest-quality customers.
The company is planning to introduce a credit card product that could provide a whole new segment of growth in 2025. Its market remains significantly underserved.
goeasy only trades for 10 times earnings, and it has a 2.5% yield. It has a great record of quickly growing its dividend. Overall, it looks like an attractive buy if you can think long term with this stock.
