It could be difficult to determine undervalued shares at current, provided that the broader markets are buying and selling close to all-time highs in September 2025. Nonetheless, when you look intently, a number of mid- and small-cap TSX shares are at the moment buying and selling at a gorgeous valuation.
On this article, I’ve recognized two high undervalued TSX shares I’d purchase proper now.
Is that this TSX inventory purchase?
Valued at a market cap of $533 million, Pc Modelling Group (TSX:CMG) is down 56% from document ranges. Pc Modelling Group is a Calgary-based software program and consulting firm that develops reservoir simulation and seismic interpretation software program for the oil and gasoline trade.
It affords specialised instruments, akin to IMEX, GEM, and STARS, for modelling oil restoration processes in each standard and unconventional reservoirs, together with optimization options that make the most of machine studying and statistical evaluation.
Pc Modelling Group faces headwinds in 2025 regardless of its formidable acquisition technique below CEO Pramod Jain’s management. The reservoir simulation software program firm reported a 3% year-over-year decline in income in fiscal Q1 2026. Furthermore, natural gross sales had been down 15% within the June quarter.
CMG’s core reservoir simulation enterprise, which has traditionally generated sturdy money flows with 40%-plus EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) margins, skilled significant setbacks.
Its adjusted EBITDA fell 26% to $7.1 million, with margins compressing to 24% from 31% within the prior yr. A serious buyer loss to aggressive competitor pricing additional pressured outcomes, highlighting vulnerability in CMG’s historically sticky buyer relationships.
Jain’s “CMG 4.0” technique goals to remodel the corporate right into a platform consolidator by way of acquisitions in seismic interpretation software program.
Since 2022, CMG has deployed $73 million to amass Bluware, Sharp Reflections, and just lately Seisware, including $50 million in income. Analysts forecast gross sales to rise from $129.5 million in fiscal 2025 to $247 million in fiscal 2030.
On this interval, free money circulate is projected to broaden from $28.5 million to $86 million. If the TSX inventory is priced at 12 instances ahead FCF, which is an affordable valuation, it ought to achieve greater than 90% over the subsequent 4 years.
Is that this TSX inventory undervalued?
Valued at $3 billion by market cap, TerraVest Industries (TSX:TVK) is a Canadian manufacturing firm that produces specialised tools and providers throughout 4 essential segments.
- The HVAC Tools division makes residential and business gasoline tanks, furnaces, boilers, and air con programs.
- The Compressed Gasoline Tools phase manufactures storage, distribution, and dishing out tools for numerous gases, together with propane, pure gasoline, and carbon dioxide, serving gasoline distributors and power corporations.
- The Processing Tools division produces wellhead tools, biogas programs, water therapy expertise, and customized course of tools for oil and gasoline producers and utilities.
- The Service phase gives water administration, environmental providers, heating, leases, and effectively providers.
TerraVest serves numerous markets, together with agriculture, mining, power, chemical substances, utilities, transportation, and development, throughout Canada, america, and internationally.
Over the past decade, the TSX inventory has returned almost 3,000% to shareholders, outperforming the broader market by a large margin. Analysts forecast TerraVest to extend gross sales from $912 million in fiscal 2024 (led to September) to $2.1 billion in fiscal 2027. Throughout this era, adjusted earnings are forecast to extend from $3.30 per share to $7.13 per share.
If the TSX inventory is priced at 30 instances ahead earnings, which is cheap, given its development estimates, it ought to commerce at $214 in September 2026, indicating an upside potential of 55% from present ranges.
