As the S&P/TSX Composite Index continues to be near or at new all-time highs consistently this year, many equity securities trading on the TSX seem to have reached expensive valuations. However, it is not impossible to find publicly traded companies trading below their intrinsic values on the stock market.

Knowing how to find undervalued stocks can work wonders for value-seeking investors looking to capitalize on the upside potential of such companies to grow their wealth. Undervalued does not necessarily mean that the stock is trading for a massive discount. It could also mean that the current share price of the stock does not reflect its future potential right now.

Today, I will discuss two undervalued stocks that I would consider buying right now and holding in my portfolio for the long haul to enjoy outsized returns.

Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a Big Six Canadian bank, and it might seem like an odd name to see when I am talking about cheap TSX stocks to buy. Trading for $146.64 per share at writing, the $65.28 billion market capitalization bank stock does not come with a very affordable price tag. But it is a cheap stock considering its potential to deliver stellar shareholder returns through capital growth.

As the economic expansion continues, Canada’s biggest financial institutions will be leading the charge. Out of the Big Six, CIBC has a track record of outperforming its peers during bull market conditions. With a forward P/E ratio of just 10.27, the bank stock could have a long way to go before fully realizing its value, making it a relatively cheap stock to consider adding to your portfolio today.

Auxly Cannabis Group

Auxly Cannabis Group (TSXV:XLY) is a cheap stock that comes with a price tag that reflects the term cheap.

Trading for just $0.26 per share at writing, the $213.33 million market capitalization cannabis company is nowhere near the likes of CIBC stock in many ways but one: it is one of the best-performing stocks in its sector. The cannabis industry has been bogged down by lacklustre revenues and disappointments, yet Auxly continues to perform better than its peers.

The cannabis producer relies on its diversified revenue streams to boost its performance and fuel its growth. Analysts believe that the company will continue to perform better than its peers, with an upside potential of over 80%. It could be the right time to buy the undervalued cannabis stock today.

Foolish takeaway

The stock market grinded higher and higher after a spectacular recovery from the pandemic frenzy-induced market downturn last year. While most stocks seem either fully valued or teetering near overvalued territory, there are some companies that have yet to deliver on their potential to provide upside to shareholders.

Canadian Imperial Bank of Commerce and Auxly Cannabis Group are two such companies that you can consider buying today to capitalize on potentially significant long-term returns.

The post 2 Cheap TSX Stocks to Buy Now appeared first on The Motley Fool Canada.