Whereas the TSX Composite Index has jumped 23% to date in 2025 and is at present buying and selling close to report ranges, many basically sturdy shares have nonetheless been left behind within the rally. At instances, lagging shares are doing every part proper behind the scenes however get neglected as a result of short-term challenges.
And that’s the place the actual alternatives present up for long-term buyers, particularly when a well-managed firm with bettering financials, a large backlog, and publicity to a long-term development like electrical autos (EVs) is down near 30% from its 52-week highs.
That’s precisely what’s occurring with NFI Group (TSX:NFI). Regardless of a number of positives, NFI inventory has struggled up to now three months. However there’s extra to this story than simply the inventory chart. Let’s discover out what’s occurring at NFI of late and why I nonetheless see it as an impressive TSX inventory that may very well be price shopping for and holding for the long term.
Why NFI inventory has struggled currently
During the last three months, NFI inventory has fallen sharply, largely as a result of weaker-than-expected earnings within the second quarter. The corporate has confronted short-term pressures round inflation, provide chain disruptions, and order delays, which have weighed on its margins and sentiment, at the same time as its underlying enterprise continues to strengthen.
In reality, most of those headwinds are already easing, with NFI just lately confirming higher components availability and bettering manufacturing stream. That’s why I feel by focusing solely on short-term challenges slightly than long-term momentum, buyers could also be lacking the forest for the timber.
Order backlog factors to rising demand
Certainly one of NFI’s most spectacular strengths stays its huge US$13 billion-plus order backlog. It clearly displays rising world demand for electrical and low-emission buses, a market that’s anticipated to develop additional over the subsequent decade as transit companies and governments shift towards cleaner transportation.
Notably, the corporate continues to win high-value contracts throughout Canada, the U.S., and the U.Ok., giving it stable visibility into future income and manufacturing. I see this stable order pipeline as a sign that NFI is executing effectively behind the scenes.
Sturdy tailwinds within the EV transition
NFI is likely one of the few Canadian companies with direct publicity to the electrification of public transit, which is a multi-decade development supported by coverage, funding, and environmental mandates. The corporate is already delivering zero-emission buses at scale, and it’s well-positioned to develop as extra cities modernize their fleets within the years to come back.
In the meantime, NFI can be taking steps to strengthen its steadiness sheet, scale back debt, and enhance liquidity. The corporate raised capital in 2023 and has since improved its money stream place by means of higher stock administration and price management.
As its manufacturing ramps up additional and deliveries catch as much as orders, NFI’s margins are anticipated to get better sharply and enhance its earnings.
At this value, the chance/reward tradeoff appears actually enticing
On the time of writing, NFI inventory was buying and selling at $13.73 per share with a market cap of $1.6 billion. Regardless of the inventory falling sharply in latest months, the corporate’s long-term progress prospects are backed by a big order ebook, bettering operations, and publicity to the EV development.
That’s why, at present ranges, NFI affords a pretty entry level for long-term buyers, for my part. Whereas the inventory may even see volatility within the close to time period, its long-term story stays intact — and arguably stronger than ever.
