The broader equity market is under pressure amid uncertainty over the U.S.-Canada trade tariffs. Nonetheless, the expected decline in interest rates and moderation in inflation will likely drive fundamentally strong Canadian stocks, offering significant value near the current price levels.
Against this background, here are two value stocks to buy and hold forever.
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goeasy
goeasy (TSX:GSY) is a compelling value stock to buy and hold for the long term. This subprime lender has delivered exceptional gains over the past decade, outperforming the broader market index. Its ability to generate double-digit revenues and earnings growth and enhance its shareholders’ value by steadily growing its dividends has led to stellar capital gains in the past.
Over the past five years, its stock price has increased at a compound annual growth rate (CAGR) of about 24%, marking an overall gain of more than 189%. This capital gain was supported by its solid revenue and earnings, which increased at a CAGR of 20.1% and 28.1%, respectively, in the last five years.
Besides strong capital gains, goeasy’s solid bottom-line growth enabled it to increase its dividend per share for 11 consecutive years.
While goeasy stock has outpaced the broader market, it has witnessed a pullback. It is down about 28.5% from its 52-week low of $206.02 and is trading at a compelling next-12-month (NTM) Price/Earnings (P/E) multiple of 7.5, significantly below its historical average. Moreover, the stock looks extremely cheap, considering its solid double-digit earnings growth rate, a decent dividend yield of 4%, and a high ROE of over 26%.
Besides trading cheaply, goeasy is poised to deliver solid growth, benefitting from its dominance in the non-prime lending segment, expanding consumer loan portfolio, solid credit underwriting capabilities, and a large addressable market. Further, new product launches, geographic expansion, omnichannel offerings, and diversified funding sources will likely drive its financials and share price.
WELL Health
WELL Health (TSX:WELL) is another attractive stock offering significant value near the current price levels. The recent pullback has driven its valuation lower. WELL stock is trading at an NTM EV/sales (Enterprise Value-to-Sales) multiple of 1.5, significantly below its historical average, representing a buying opportunity.
While the digital healthcare company is trading cheaply, it has solid fundamentals and is growing rapidly. This is reflected through solid organic sales driven by a surge in patient visits. Moreover, the company’s focus on strategic acquisitions further accelerates its growth.
Since the company operates within the defensive healthcare sector, it remains relatively immune to economic downturns. Further, the U.S. tariffs on Canada will not impact its financials as it does not rely on cross-border sales.
Looking ahead, WELL Health is poised to deliver solid growth as it strengthens its position as a leader in the digital healthcare space. It is expanding its network across its omnichannel healthcare platforms and scaling its operations through acquisitions, which will likely generate solid revenues. It is also adding more clinics to its Canadian Clinics network, which will drive its organic sales.
The company is also focusing on improving its profitability, paying down debt, and fortifying its balance sheet, which will augur well for growth. Moreover, WELL Health is leveraging artificial intelligence (AI) technology to develop new products and focusing on cost-saving initiatives, which will support its financials and share price.
