Canadian stock markets have seen strong buying momentum in recent months S&P/TSX composite index an increase of 36.2% from the low in April. Healthy quarterly results and interest rate cuts appear to have boosted investor sentiment, pushing stock markets higher. Year to date, the index is up 22.4%.
However, the following two Canadian stocks have lagged the broader market due to several factors. Let’s analyze their fundamentals, growth prospects and valuations to assess whether they represent attractive buying opportunities at current levels.
WELL Health Technologies
WELL Health Technologies (TSX:WELL), a digital health company, has been under pressure this year, losing 15.9% of its stock value. The ongoing investigation into subsidiary Circle Medical’s billing practices has dampened investor sentiment, leading to a sharp correction in the stock. However, the company reported impressive second-quarter performance in August, with revenue and adjusted net income growing 56.9% and 529.3%, respectively. Together with the organic growth, the strategic acquisitions completed over the past twelve months have boosted the financial results.
Meanwhile, the increasing adoption of telehealth services and the continued digitalization of clinical workflows have opened significant long-term growth opportunities for WELL Health. Moreover, the company is expanding its product offering by launching innovative and Artificial Intelligence (AI)-based products, which could strengthen its market share. It is also continuing its inorganic growth and has signed letters of intent to acquire 15 assets starting August 14, which could contribute $134 million to annual revenue. Considering all these factors, I think WELL Health’s growth prospects look healthy.
Meanwhile, the recent sell-off has pushed the valuation to an attractive level, with the NTM (next twelve months) price-to-earnings ratio at 13.7. Given its strong fundamentals, promising growth prospects and attractive valuation, I think WELL Health presents an attractive buying opportunity at current levels.
easy
easy (TSX:GSY), a subprime lender, has been under pressure since Jehosphat Research published its report on September 23. The report accused Goeasy of improperly delaying reporting of its credit losses and suppressing delinquencies. Although goeasy has refuted these allegations, shares are down more than 12% since the report was published and are down 1.3% year to date. As a result of this pullback, the company is currently trading at NTM price-to-sales and NTM price-to-earnings ratios of 1.4 and 7.9, respectively.
Additionally, goeasy continues to expand its loan portfolio, generating $1.58 billion in loans in the first two quarters of this year, bringing the total to $5.1 billion. The Canadian subprime loan market has grown 4.2% since 2021, reaching $231 billion in 2024. Currently, the company has gained only 2% of the market share. There are therefore significant opportunities for expansion. With its broadened product portfolio, strategic initiatives and growing market penetration, the company is well positioned to strengthen its market share. Meanwhile, the company’s management expects its loan portfolio to grow 48% from current levels to $7.55 billion by the end of 2027 (mid-point of expectations).
Amid these expansions, management hopes to grow revenue to a CAGR of 11.4% (compound annual growth rate) while improving operating margin to 43%. Furthermore, goeasy has rewarded its shareholders by increasing the dividend at an impressive CAGR of 29.5% over the past 11 years and currently offers a healthy dividend yield of 3.65%. Considering all these factors, I think goeasy can deliver superior returns in the long run.
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