While the tariff disputes and heightened geopolitical tensions have added volatility to the market, the broader Canadian benchmark index has advanced 37% in 12 months, driven largely by a sustained rally in the basic materials and energy sectors.
Even with this strong market performance, a few high-quality TSX stocks have dropped significantly and underperformed the broader equity market. The decline in these stocks reflects shifts in broader market sentiment or short-term operational challenges rather than deterioration in underlying fundamentals.
Notably, these companies have a proven business model and solid long-term growth prospects. Their fundamentally strong businesses and strategic positioning suggest they are well equipped to navigate near-term uncertainty. As operating conditions stabilize and investor sentiment improves, such stocks are positioned to recover swiftly and potentially deliver meaningful upside.
Against this backdrop, here are the two best TSX stocks to buy before the recovery takes hold.
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Best TSX Stock #1: Shopify
Shares of Shopify (TSX: SHOP) have pulled back meaningfully in recent months, creating an appealing entry point for long-term investors. The stock currently trades about 27% below its 52-week high and has fallen roughly 17% over the past three months. The decline largely reflects investor concerns around valuation and fears that rapid advances in artificial intelligence (AI) could disrupt Shopify’s business model.
Further, market sentiment also weakened after the company reported a deceleration in its top-line growth rate in Q4 and forecasted a slightly lower free cash flow margin for Q1 2026.
Despite these near-term concerns, Shopify’s fundamentals remain strong. Management expects revenue to grow in the low-30% range year-over-year in the first quarter, with payments continuing to be a major growth driver. The increasing adoption of Shop Pay is boosting merchant engagement and transaction activity across the platform.
Growth is also being supported by existing merchants expanding their operations, steady onboarding of new sellers across multiple channels, and strengthening international momentum, particularly across Europe. The company continues to roll out additional products in new geographies, steadily broadening its global presence.
In 2025, Shopify saw strong momentum in its B2B segment. GMV from B2B merchants jumped 84% in the fourth quarter and rose 96% for the full year. Offline GMV also performed well, climbing 29% in Q4. As Shopify strengthens both B2B and offline commerce, these channels are becoming key growth drivers and expanding the ecosystem to serve more industries and business types.
With no debt, a strong balance sheet, and continued investment in AI-driven initiatives such as Agentic Storefronts, Shopify appears well-positioned to adapt to the evolving digital commerce landscape. Further, the recent correction has eased some of the valuation concerns, making Shopify stock a buy.
Best TSX Stock #2: Propel Holdings
Shares of Propel Holdings (TSX:PRL) have fallen roughly 33% over the past six months, largely due to concerns about near-term profitability. Investor sentiment weakened after the company increased loan-loss provisions due to softness in certain parts of its U.S. portfolio. In addition, revenue yield declined in the fourth quarter, while higher costs per funded origination and increased infrastructure spending related to the launch of Propel Bank and the Freshline added further pressure.
Despite these short-term headwinds, the company’s long-term outlook remains compelling. Management has been investing heavily in technology and infrastructure to improve efficiency and support revenue expansion. Efforts to diversify marketing partnerships, automate cost structures, and expand into new geographic markets should strengthen profitability over time. Importantly, Propel maintains a solid balance sheet, supported by operating cash flow and sufficient funding capacity to continue investing in growth initiatives.
New products and platforms are expected to play a key role in the next phase of growth. The Freshline credit product is projected to become an important revenue driver, while the newly operational Propel Bank opens additional avenues for expansion through product diversification and access to new markets.
Another promising area is the company’s Lending-as-a-Service program. With rising commitments from capital partners and the addition of Freshline and Propel Bank, management expects the program to generate strong momentum in 2026 and beyond.
Overall, Propel is one of the best TSX stocks to buy at a discounted price.
