2 Growth Stocks to Consider Adding to Your Portfolio

Which two companies do I think have immense upside in the future?

| More on:

Growth stocks have been killing it in the market this year. It seems that the COVID-19 pandemic has caused investors to heavily consider companies that will outperform in the future as opposed to those that seem of fair value now. In this article, I will provide two growth stocks that I think investors should consider adding to their portfolios.

A leader in network management services

Although the housing market is facing massive amounts of uncertainty due to the global pandemic, Real Matters (TSX:REAL) has been on a tear this year. This company’s platform combines its proprietary technology and network management capabilities with field agents (real estate appraisers) to create a service marketplace for the mortgage and insurance industries. Real Matters estimates its total addressable market to be approximately US$13 billion.

Real Matters boasts a very impressive client list. 60 of the top 100 mortgage lenders in the United States are among those listed as customers of the company. Its client-retention rate currently stands at 90%. To keep growing in the future, Real Matters intends to leverage its performance to attract new customers and continue pursuing acquisitions.

The company’s IPO was in May 2017. Its first year was rather tumultuous, as investors were hesitant to pour into the stock. However, its stock performance year-to-date is a different story. Since the start of the year, Real Matters stock has increased over 160%! With a market cap of just under $3 billion, Real Matters can still provide very high returns if the company is successful in executing its growth strategy.

Capitalizing on an under-banked region

This second company is one of the Big Five Canadian banks. To some, this might sound a bit odd, since those companies are not often viewed as very intriguing growth stocks. However, I urge you to read on since the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) should definitely be considered as such.

The company needs no introduction, as it is the third-largest Canadian bank in terms of assets, revenue, and market cap. However, among the top five banks, the Bank of Nova Scotia’s presence is unparalleled in the Pacific Alliance (Chile, Columbia, Mexico, and Peru). According to its 2019 annual report, 23% of the Bank of Nova Scotia’s earnings comes from the Pacific Alliance.

Year to date, the bank has underperformed. Bank of Nova Scotia stock plummeted as much as 37% because of the COVID-19 pandemic. Since hitting its bottom in March, the company has recovered just over 20% of its value. I expect this company to outperform its peers moving forward based on continued growth within the Pacific Alliance.

Foolish takeaway

I am a big fan of investing in growth stocks. Many view this sort of investing to be much riskier than sticking with value or dividend investing. While that may be true, there are excellent companies in industries that are less volatile. Often, those companies are also featured in media much less frequently, which provides you an opportunity to buy in before the masses take note. Two companies that I think investors should consider adding to their portfolio are Real Matters and the Bank of Nova Scotia.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jed Lloren has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Tech Stocks

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

money goes up and down in balance
Tech Stocks

1 “Magnificent 7” Stock I’d Buy Over Nvidia Right Now

Here's why Meta Platforms stock is a better choice for Canadian investors compared to Nvidia in November 2024.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »