Iron stomach? 3 riskier stocks that could pay off big in the future

While trading in broader markets is near record highs, several stocks across sectors are trading lower than all-time highs. Here are three TSX stocks that may seem risky right now but could deliver big returns in the future.

A flock of Canada geese

Valued at $1.6 billion by market cap, Canada goose (TSX:GOOS) is trading at over 80% of all-time highs. Canada Goose designs, manufactures and sells luxury clothing for men, women and children in many global markets. The company draws a significant portion of its sales from China, a region struggling with slower consumer spending.

Canada Goose sales increased from $958 million in fiscal 2020 (which ended in March) to $1.33 billion over the last 12 months. However, the company’s operating income fell from $187 million to $167 million during this period.

It’s worth noting that Canada Goose has improved its free cash flow in recent quarters. Over the last four quarters, the company’s free cash flow was $179 million, compared to $109 million in fiscal 2024 and $71 million in fiscal 2023. So GOOS stock, valued at 6.8 times free cash flow, is really cheap considering earnings are forecast to increase from $0.73 per share in fiscal 2024 to $0.94 per share in 2026.

For fiscal year 2025, Canada Goose expects total sales to grow in the single digits despite a sluggish macro environment.

WildBrain shares

Valued at $260 million by market cap, Wild brain (TSX:WILD) develops, produces and distributes films and television programs. It has two main business segments: content business and television broadcasting in Canada.

Down 86% from record highs WildBrain is struggling due to operational challenges, a weak balance sheet and a shift to online streaming. In fiscal year 2024 (which ended in June), WildBrain reported a 13% decline in sales. However, analysts expect sales to increase by 11% to $512 million in 2025 and $557 million in 2026.

WildBrain intends to sell non-core assets and reduce balance sheet debt, which should increase future earnings. WILD stock, valued at 0.5 times forward sales, is cheap and could produce a turnaround if its revenue growth translates into earnings improvement.

Sleep Country Shares

The last TSX stock on my list is Land of dreams (TSX:ZZZ), which is trading 20% ​​below all-time highs. Despite the delisting, the company’s stock has returned nearly 180% to shareholders after accounting for dividend reinvestment over the past decade.

Sleep Country retails mattress and bedding products in Canada. It pays shareholders an annual dividend of $0.95 per share, implying a forward yield of almost 3%. Over the past nine years, these payouts have almost doubled, significantly increasing profitability at cost.

Over the past 12 months, Sleep Country reported revenue of $953.6 million, up from $712 million in 2019. Analysts tracking the TSX stock expect total sales to exceed $1 billion in 2025. Additionally, it is expected that the company will increase adjusted earnings from $2.12 per share in 2023 to $2.6 per share in 2025.

ZZZ stock, trading at 13.4 times forward earnings, is relatively cheap given the outlook for adjusted earnings to grow at more than 20% annually through 2028.