Buy Alert: The Top TSX Stocks to Own Right Now

Value investors should consider gaining exposure to TSX stocks such as Cargojet and Bombardier in February 2025.

Aditya Raghunath ❯

Aditya Raghunath joined the Motley Fool Canada team in 2019 and has close to seven years of experience in covering publicly-listed companies. With a post-graduate degree in finance, Aditya aims to educate and engage Canadians by writing extensively about growth, dividend, and value stocks. If you are considering investing in the stock market, he recommends reading The Intelligent Investor by Benjamin Graham before taking the plunge.

Published February 19, 8:15 pm EST

Investing in undervalued growth stocks is a proven strategy to build long-term wealth. So, it’s essential to identify companies positioned to grow their earnings and revenue over time while trading at a reasonable valuation.

In this article, I have identified two cheap TSX stocks you can own in 2025 to beat the broader markets over time. Let’s see why.

The bull case for this TSX stock

Valued at a market cap of $1.73 billion, Cargojet (TSX:CJT) is a TSX stock that has trailed the broader markets in recent years. Founded two decades back, Cargojet has established itself as Canada’s leading cargo airline, operating over 80 flight legs nightly, serving 16 major Canadian cities. The company has secured a dominant position in Canada’s air cargo market, controlling over 90% of the domestic overnight air cargo capacity.

Its business model is built on diverse revenue streams, including domestic network operations (39%), ACMI (Aircraft, Crew, Maintenance, Insurance) services (30%), charter services (13%), and other revenue sources.

Around 75% of its revenue is secured through long-term contracts that include revenue guarantees and cost pass-through provisions. Cargojet consistently maintains a robust on-time delivery rate and serves major courier companies, including UPS, FedEx, DHL, and Amazon.

Cargojet continues to expand, growing its aircraft fleet from 25 in 2020 to 41 in 2023. Moreover, it has built an extensive international presence through 54 global airline partnerships and maintained a strong focus on capturing e-commerce opportunities.

CJT stock went public in 2005 and has since returned 2,860% to shareholders after adjusting for dividends. Despite its outsized gains, the TSX stock is down over 55% from all-time highs in February 2025.

The company is forecast to grow its sales from $877.5 million in 2023 to $1.1 billion in 2026. In this period, adjusted earnings are forecast to expand from $2.06 per share to $7 per share. So, priced at 15.6 times forward earnings, CJT stock is cheap and trades at a 50% discount to consensus price targets.

Is Bombardier stock a good buy?

Valued at $7.9 billion by market cap, Bombardier (TSX:BBD.B) has almost doubled investor returns in the last five years. Bombardier is an aircraft manufacturer currently navigating an uncertain and challenging macro environment, which has prevented the company from providing guidance for 2024.

In 2024, Bombardier reported revenue of $8.7 billion, above its initial guidance of $8.5 billion. Its high-margin Services business surpassed $2 billion in sales, a year ahead of schedule. Moreover, Bombardier reported adjusted earnings before interest, tax, depreciation, and amortization of $1.36 billion, indicating a margin of 15.7% while reducing its leverage ratio to 2.9 times.

With a backlog of $14.4 billion and a book-to-bill ratio of one, Bombardier continues to wrestle with supply chain issues. The company has reduced its gross debt by almost 50% over the last four years, which should drive earnings growth in the near term.

Analysts expect adjusted earnings to expand from $5.16 per share in 2024 to $7 per share in 2026. So, priced at 12 times forward earnings, the TSX stock is cheap and trades at a discount of 30% to consensus price targets.