We recently compiled a list of the 7 Best Canadian Stocks Under $20. In this article, we are going to take a look at where Lightspeed Commerce Inc. (NYSE:LSPD) stands against the other Canadian stocks under $20.
What’s Happening in the Canadian Stock Market?
The Canadian economy is beginning to settle down as inflation is on a steady downward trend and the Bank of Canada has also taken an easier policy stance, thereby paving the way for stronger economic growth moving forward. On July 19, Reuters reported that the Bank of Canada cut its overnight interest rates by 25 basis points to 4.5% based on the expectation that inflation will continue to fall.
Inflation rates in Canada cooled a little more than expected making interest rate cuts more likely. On July 16, as per Reuters, June 2024 Consumer Price Index (CPI) cooled down to 2.7% a 0.1% decrease month-over-month thereby paving the way for an interest rate cut.
As a result of the interest rate cut, the Canadian stock market was seen performing better. On August 16, Reuters reported that the Canadian stock index ended higher on Friday and witnessed its biggest weekly advance of the year. Investors globally have been cheering the recent signs of the US economic resilience and the recent record high gold prices also boosted the mining sector
The S&P/TSK composite index ended up 0.1% at 23,054.61, posting a seven-day gain streak, recorded as the longest daily winning streak since April 2023.
Looking at a sectoral analysis, the materials group that comprises metal minerals and fertilizer companies was up 1.5% as the price of gold went up by 2% to an all-time high. Moreover, the financial market, which contributed 29% to TSK weighting, grew by 0.6%. The energy sector was a drag, however, and fell 1.1% due to lower oil prices, which settled at $76.65 1.9% lower than expected. The weaker price of oil was mainly attributed to slower demand from China.
On August 13, Ross Healy, chairman of Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management, appeared on Bloomberg to discuss the performance of TSK and the US stock market. Ross Healy, mentioned that the Canadian stock market is trading at 1.5 times its adjusted book value, whereas the NASDAQ is trading at 9.5 times its book value. Mentioning these numbers Ross Healy, stated that for investors looking to invest for 5 years or longer, the Canadian stock market looks more lucrative due to its potential for growth and the portfolio of stocks it has to offer.
Ross Healy, further believes that we have had a long US advantage and now the market is heading towards a Canadian advantage. Moreover, the precious metal and gold options in the TSK index make the market poised for growth in the long term. Ross Healy, while stating his bull case for gold companies mentioned that companies that have good money on their balance sheets and have been able to find underdeveloped projects to work on have been successful when compared to their competitors.
Our Methodology
To compile the list of 7 best Canadian stocks under $20 we used the Finviz screener. We used the screener to filter out Canadian Stocks that were trading under $20 and sorted them by their market capitalization to get a consolidated list of stocks. Next, we ranked these stocks based on the average price target upside as per Wall Street analysts. The stocks are ranked in ascending order of the average price target upside, as of August 18. Moreover, we have also mentioned the share price of each stock as of August 18, 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer using a mobile device to purchase goods through an omni-channel experience.
Lightspeed Commerce Inc. (NYSE:LSPD)
Average Price Target Upside as of August 18: 34.73%
Share Price as of August 18: $13.36
Lightspeed Commerce Inc. (NYSE:LSPD) engages in providing cloud-based software and payment solutions for businesses in retail, hospitality, and other sectors. The software provided by the company helps businesses manage sales, accept payments, and improve operations. The company operates through various business segments including Lightspeed Retail, Lightspeed Restaurant, Lightspeed eCommerce, LightSpeed Payments, and more.
As per the company’s annual report for the fiscal year ended March 31, 2024, the company grew its subscription and transaction-based revenue by 24% and recurring subscription revenue by around 95%, indicating strong market capitalization of Lightspeed Commerce Inc. (NYSE:LSPD). Moreover, the company had an annual net retention rate of 110% and international diversification with 49% of customers from outside of North America.
Lightspeed Commerce Inc. (NYSE:LSPD) posted a robust fiscal first quarter of 2025 beating analyst revenue and earnings expectations. Revenue of the company grew 27% year-over-year to reach $266.1 million. Whereas its adjusted EBITDA improved to $10.2 million from a $7 million loss last year. As a result of increased revenue the gross profit also improved 23% year-over-year indicating robust profitability.
Improvement across the company’s financials was mainly due to strong transaction-based revenue, increased payment adoption, and growth in average revenue per user indicating a growing market share of the company as a whole. Based on an impressive performance management has raised Q2 revenue guidance between $270 to $275 million with an adjusted EBITDA of around $12 million.
Should you invest in Lightspeed Commerce Inc. (NYSE:LSPD)?
A robust quarterly performance backed by historic revenue growth of 63% during the past 5 years makes Lightspeed Commerce Inc. (NYSE:LSPD) a good investment opportunity. Moreover, around $722 million in cash and cash equivalents on the company’s balance sheet provides significant room for future growth.
Although LSPD is trading at a premium to its sector, its earnings are expected to grow by 12.5% during the year to reach $0.09. 23 analysts have a Consensus Buy rating on the stock, with their median price target of $18 presenting an upside of 34.73% from the current level.
Conestoga Capital Advisors Mid-Cap Strategy stated the following regarding Lightspeed Commerce Inc. (NYSE:LSPD) in its first quarter 2024 investor letter:
“Lightspeed Commerce Inc. (NYSE:LSPD): LSPD is a leading cloud-based software and payment solutions provider to the retail and hospitality industries. The company reported a negative quarter that saw decelerating growth in gross transaction value (GTV) and a worse-than-expected guide on profitability. Following the post-earnings drawdown, there has been a CEO change, a stock repurchase authorization, and a reduction in force. The enhanced capital discipline more closely aligns with the lowered expected revenue growth rate.”
Overall LSPD ranks 6th on our list of the best Canadian stocks under $20. While we acknowledge the potential of LSPD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LSPD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.