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While overall markets are trading near record levels, several stocks across sectors are priced at a discount compared to their all-time highs. Here are three TSX stocks that may look risky right now, but are positioned to deliver big gains in the future.
Canada Goose Population
Valued at $1.6 billion by market capitalization, Canada Goose (TSX:GOOS) is trading more than 80% off all-time highs. Canada Goose designs, manufactures and sells high-performance luxury apparel for men, women and children in multiple global markets. The company derives a significant portion of its sales from China, a region struggling with slower consumer spending.
Canada Goose sales rose from $958 million in fiscal 2020 (which ended in March) to $1.33 billion over the past 12 months. However, its operating income fell from $187 million to $167 million in this period.
Notably, Canada Goose has improved its free cash flow in recent quarters. Over the past four quarters, its free cash flow amounted to $179 million, up from $109 million in fiscal 2024 and $71 million in fiscal 2023. So, with a price of 6.8 times free cash flow, GOOS stock is really cheap, given it is projected to grow earnings from $0.73 per share in fiscal 2024 to $0.94 per share in 2026.
In fiscal 2025, Canada Goose expects to grow total sales in the low single digits despite a sluggish macroeconomic environment.
WildBrain Stock
Valued at $260 million by market capitalization, wild brain (TSX:WILD) develops, produces and distributes films and television shows. It has two main business segments: content business and Canadian television broadcasting.
WildBrain, which has fallen 86% from its all-time highs, is struggling due to operational challenges, a weak balance sheet and the shift to online streaming. In fiscal 2024 (which ended in June), WildBrain saw a 13% drop in sales. However, analysts expect sales to increase 11% to $512 million in 2025 and $557 million in 2026.
WildBrain is looking to sell non-core assets and reduce balance sheet debt, which should drive higher future earnings. Priced at 0.5 times forward sales, WILD stock is cheap and could turn around if its revenue growth translates into improved earnings.
Dreamland Stocks
The last TSX stock on my list is dreamland (TSX:ZZZ), which is trading 20% below all-time highs. Despite its decline, the stock has returned nearly 180% to shareholders after adjusting for dividend reinvestments over the past decade.
Sleep Country sells mattresses and related bedding products in Canada. It pays shareholders an annual dividend of $0.95 per share, indicating a future yield of nearly 3%. These payments have nearly doubled over the past nine years, significantly improving cost performance.
Over the past 12 months, Sleep Country has reported revenue of $953.6 million, up from $712 million in 2019. Analysts following the TSX stock expect total sales to surpass $1 billion in 2025 Additionally, the company is expected to expand adjusted earnings by $2.12 per year. share in 2023 to $2.6 per share in 2025.
Priced at 13.4 times forward earnings, ZZZ stock is relatively cheap as adjusted earnings are expected to expand more than 20% annually through 2028.