Three Bargain TSX Stocks Worth Watching: TD, Sun Life, Enghouse

By early July 2021, Canada's main stock index had already climbed 15% in just six months—a pace that suggested one of the strongest years in decades might be unfolding. The country's reopening was gathering momentum, and many investors were riding the wave of a genuine bull market. Yet even as the broader market surged, a careful investor could still find stocks trading at reasonable prices, companies with solid fundamentals that hadn't yet caught up to the euphoria around them.

TD Bank stood out as the most obvious candidate. The $160 billion institution had weathered 2020 poorly, like most Canadian banks, but had rebounded sharply through the first half of 2021. What made this rebound surprising was the interest-rate environment: rates remained depressed, far below pre-pandemic levels, and the federal government showed no urgency to raise them. Banks typically benefit from higher rates, so TD's strong performance despite this headwind suggested underlying strength. The stock was trading near all-time highs, yet its price-to-earnings ratio sat just barely above 10—a modest valuation for a company with a long track record of beating the market. Beyond capital appreciation, TD offered shareholders a 3.6% dividend yield, the kind of steady income that could cushion a portfolio during inevitable downturns.

Sun Life Financial occupied a different corner of the financial sector, and it had not enjoyed the same explosive year as the banks. The insurance company's stock price reflected that more modest performance—it was trading at a P/E ratio below 10, making it even cheaper than TD on a valuation basis. Insurance might lack the glamour of growth stocks, but it possessed something equally valuable: predictability. Consumers and businesses would continue to need insurance policies for years to come, a fact that made Sun Life useful as a ballast for portfolios heavy with volatile, high-growth names. For investors seeking stability alongside reasonable returns, the stock offered a straightforward proposition.

Enghouse Systems told a different story entirely. The software company had ridden a spectacular wave in 2020, its stock climbing more than 100% as pandemic lockdowns drove demand for video conferencing and omnichannel communication tools. But as vaccination rates climbed and reopening accelerated, that tailwind reversed. The stock had fallen nearly 30% from its peak, a sharp correction that nonetheless left it up 110% over the previous five years. The company remained profitable with a solid balance sheet, and management had shown skill at acquiring smaller firms to fuel growth. At a P/E ratio of 30, the stock was more expensive than the banks or Sun Life, but that premium reflected genuine growth potential. For investors willing to pay more for the possibility of higher returns, Enghouse represented a technology play that had been knocked down but not knocked out.

The three stocks reflected different investor temperaments. TD Bank and Sun Life offered the comfort of established businesses and modest valuations—the kind of holdings that could anchor a portfolio and generate steady returns. Enghouse Systems appealed to those with a longer time horizon and higher risk tolerance, a company that had stumbled but retained the capacity to grow. What united them was that none required paying peak prices. Even as the TSX surged, bargains remained for those willing to look beyond the headlines and examine what companies were actually worth.