Stock Analysis

Undiscovered Gems in Canada to Watch This August 2024

Published August 29, 2024

Over the last 7 days, the Canadian market has remained flat, though it is up 13% over the past year with earnings expected to grow by 16% per annum over the next few years. In this promising environment, identifying undiscovered gems can be key to capitalizing on growth opportunities.

Top 10 Undiscovered Gems With Strong Fundamentals In Canada

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
TWC Enterprises	6.74%	10.99%	25.68%	★★★★★★
Taiga Building Products	NA	6.05%	10.50%	★★★★★★
Amerigo Resources	12.87%	7.49%	12.97%	★★★★★☆
Tornado Global Hydrovacs	14.62%	24.52%	64.90%	★★★★★☆
Reconnaissance Energy Africa	NA	31.73%	-6.92%	★★★★★☆
Mako Mining	22.90%	38.12%	54.79%	★★★★★☆
Firan Technology Group	17.91%	3.75%	23.32%	★★★★★☆
Pizza Pizza Royalty	15.66%	3.64%	3.95%	★★★★☆☆
Queen's Road Capital Investment	7.20%	22.14%	22.20%	★★★★☆☆
Genesis Land Development	53.32%	25.58%	47.05%	★★★★☆☆

Click here to see the full list of 45 stocks from our TSX Undiscovered Gems With Strong Fundamentals screener.

Let's review some notable picks from our screened stocks.

Hammond Power Solutions (TSX:HPS.A)

Simply Wall St Value Rating: ★★★★★★

Overview: Hammond Power Solutions Inc., along with its subsidiaries, specializes in designing, manufacturing, and selling a range of transformers across Canada, the United States, Mexico, and India and has a market cap of CA$1.43 billion.

Operations: Hammond Power Solutions generates CA$754.37 million in revenue from the manufacture and sale of transformers across its operating regions.

Hammond Power Solutions, a promising player in the electrical industry, reported CAD 197.21 million in Q2 sales, up from CAD 172.45 million last year. Net income also rose to CAD 23.59 million from CAD 13.33 million previously. The company’s debt to equity ratio has improved significantly over five years from 27.7% to 5%. Trading at a substantial discount of 48% below its estimated fair value and showing an earnings growth rate of 12.3%, it surpasses the industry average of 6.5%.

Leon's Furniture (TSX:LNF)

Simply Wall St Value Rating: ★★★★★★

Overview: Leon's Furniture Limited, together with its subsidiaries, operates as a retailer of home furnishings, mattresses, appliances, and electronics in Canada with a market cap of CA$2.05 billion.

Operations: Leon's generates revenue primarily from the sale of home furnishings, mattresses, appliances, and electronics amounting to CA$2.53 billion. The company's net profit margin is 6.5%.

Leon's Furniture, a notable player in the Canadian retail market, has shown promising financial health. Recent earnings reported CAD 30.17 million in net income for Q2 2024, up from CAD 27.42 million last year with sales hitting CAD 617.66 million compared to CAD 593.84 million previously. The company also declared a dividend increase to $0.20 per share and has reduced its debt-to-equity ratio from 20.4% to 10.4% over five years, indicating strong management of liabilities and robust profitability metrics with EBIT covering interest payments by 11 times.

TerraVest Industries (TSX:TVK)

Simply Wall St Value Rating: ★★★★★☆

Overview: TerraVest Industries Inc. manufactures and sells goods and services to energy, agriculture, mining, transportation, and other markets in Canada and the United States with a market cap of CA$1.86 billion.

Operations: The company generates revenue primarily from its HVAC and Containment Equipment segment (CA$292.90 million), Compressed Gas Equipment segment (CA$243.77 million), and Service segment (CA$201.78 million). The Processing Equipment segment contributes CA$117.58 million to the total revenue, while Corporate activities result in a minor negative impact of -CA$0.93 million.

TerraVest Industries reported CAD 238.13 million in revenue for Q3 2024, up from CAD 150.36 million a year ago, with net income rising to CAD 11.92 million from CAD 7.97 million. The company’s debt to equity ratio improved significantly over five years, dropping from 117.9% to 49.4%. Trading at a value below its fair estimate by about a quarter, TerraVest's earnings grew by an impressive 43.6%, outpacing the industry average of -4.7%.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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