Investing in high-quality, undervalued shares that commerce at a reduction to their intrinsic worth is a confirmed technique for producing outsized positive aspects. On this article, I’ve recognized two such low cost TSX shares you should buy proper now and profit from market-beating returns over time.
Is that this Canadian inventory undervalued?
Valued at a market capitalization of $10 invoiceion, Lumine Group (TSXV:LMN) is a Canadian inventory that’s at the moment 27% under its all-time highs. Regardless of its ongoing pullback, LMN inventory has returned 136% to shareholders since its preliminary public providing in March 2023.
Based in 2014, Lumine develops, installs, and customizes software program merchandise. It additionally supplies associated skilled and help companies. Lumine Group reported strong second-quarter outcomes, demonstrating the corporate’s capability to transform income progress into substantial working leverage and money stream technology.
In Q2 2025, Lumine reported income of $184 million, representing a 13% year-over-year improve. Within the first six months of 2025, it grew gross sales by 19% to $362.6 million. Whereas acquisitions have been the important thing driver of gross sales, natural income rose by 6% in Q2.
In the meantime, working earnings grew by 71% to $62.7 million in Q2, outpacing income progress by a large margin. This working leverage enabled Lumine to report a web earnings of $23.6 million within the June quarter, in comparison with a lack of $2.2 million in the identical interval final 12 months. Within the first two quarters, its working earnings grew by 51% to $122.2 million.
Notably, working money stream elevated by 705% to $78.4 million, up from $9.7 million, whereas free money stream expanded from $2.8 million to $72.4 million during the last 12 months.
Analysts monitoring LMN inventory forecast gross sales to rise from $668 million in 2024 to $1.8 billion in 2029. On this interval, adjusted earnings are forecast to broaden from $0.93 per share to $2.45 per share.
If the tech inventory is priced at 25 instances ahead earnings, which is affordable, it ought to commerce at $61.25 in early 2029, indicating an upside potential of over 50% from present ranges.
Is that this TSX inventory an excellent purchase?
Valued at a market cap of $933 million, Magellan Aerospace (TSX:MAL) engineers and manufactures important aerospace parts, together with aeroengine components, aerostructures, touchdown gear techniques, rocket motors, satellite tv for pc platforms, and aluminum/magnesium castings.
The Canadian firm serves business and defence aerospace markets throughout North America and Europe by way of specialised manufacturing of flight-critical parts and area options.
Magellan generates 63.5% of revenues from business aerospace markets whereas defence contracts contribute 36.5%. This diversification helps mitigate volatility inherent in both market phase whereas offering publicity to civilian aviation and sustained defence spending.
Magellan not too long ago secured vital long-term agreements that improve income predictability. The amended revenue-sharing settlement with GE Aerospace expands manufacturing of F414 engine parts for the Korean KF-21 plane program. Moreover, new contracts with Pratt & Whitney Canada lengthen manufacturing agreements by way of 2034, with manufacturing based mostly on the firm’s facility in India.
Magellan’s sole-source provider standing on key applications creates aggressive moats, whereas long-term contract visibility helps predictable money flows. Nevertheless, aerospace trade cyclicality and program-specific dangers stay concerns for traders evaluating the corporate’s progress trajectory and margin sustainability.
Analysts monitoring MAL inventory forecast gross sales to rise from $942 million in 2024 to $1.1 billion in 2029. On this interval, adjusted earnings are forecast to broaden from $0.62 per share to $1.47 per share.
If the TSX inventory is priced at 25 instances ahead earnings, it ought to commerce at $37 in early 2027, indicating an upside potential of over 125% from present ranges.
