Smart Investor: These 2 Stocks Can Double Your Money in 5 Years

A smart investor chooses the right stock at the right time. The September market correction has created a good opportunity to buy quality growth stocks at a discounted price.

| More on:

After six months of rally, the stock market became volatile in September as the first phase of the government stimulus package ended. The wait is over. As the end of this volatile month nears, the Justin Trudeau government announced the next phase of the COVID-19 Response Plan.

Prepare for another round of stock market rally

The new benefits look good at the first glance. It can maintain liquidity in the hands of unemployed Canadians while they search for a job. The stock market has been rallying for the last six months on the back of this liquidity. Once these benefits roll out and increase liquidity, the stock market would return to its growth path.

This is the right time to buy some good quality growth stocks that have dipped with the market this month.

Cargojet stock

Cargojet (TSX:CJT) was a beneficiary of the pandemic as the demand for its time-sensitive air cargo services surged. It was declared an essential service during the lockdown as it handles 90-95% of Canada’s air cargo traffic. It saw a significant surge in volume for e-commerce orders, personal protective equipment, and other medical supplies from Asia to Canada.

The demand surge in e-commerce and medical supplies has more than offset the declines in business-to-business (B2B) volumes, thereby increasing its second-quarter revenue by 65% YoY (year over year) to $196.1 million. It also benefitted from lower oil prices, which reduced the fuel cost and increased its adjusted EBITDA by 143% YoY to $91 million. This would become the new normal for the air cargo giant as the e-commerce trend is here to stay.

As the economy reopens, the surge in medical supply orders would slow, but that will be compensated by the return of B2B volumes. The oil prices will take some time to surge, which means that Cargojet will continue to enjoy higher profits in the mid-term.

The above factors drove Cargojet stock up 80% year to date (YTD). The Toronto Stock Exchange even recognized it as the tenth best performing stock on the 2020 list of TSX30. The stock has been rising at a CAGR of 24% even before the pandemic. If you had invested $10,000 in Cargojet in early 2015, you would now have $72,000 in your account.

The Cargojet stock rally is here to stay. It has already surged 17% after falling to $162.57 in early September correction and is just 3% away from its all-time high. It is set to make new highs in the coming months as the holiday season volumes pick up.

Kinaxis stock

Just like Cargojet, Kinaxis (TSX:KXS) is set to benefit from the surge in e-commerce. The e-commerce wave has added a layer of complexity to supply chain and logistics. Moreover, the pandemic is in different phases across the world. Some manufacturers are under lockdown and some are operating at full capacity. Consumer demand has also changed. The need for the post-pandemic world is a flexible supply chain, creating a need for Kinaxis.

Kinaxis caters to large organizations with complex supply chain operations. At the peak of the pandemic, the company saw delays in new subscriptions and renewals. But the re-opening of the economy would drive its subscriptions. In the second quarter, Kinaxias’s revenue rose 45% YoY to US$61.4 billion, as many large enterprises renewed their subscription for a longer-term. Its adjusted EBITDA rose 94.5% YoY to US$22.5 million.

Kinaxis has been doing well even before the pandemic. Its revenue and adjusted EBITDA surged at a CAGR of 22% and 29%, respectively, in the last five years. This growth reflected in its stock price as Kinaxis stock surged 75.5% YTD. The general public holds 60% of Kinaxis shares and institutional investors, including hedge funds, hold the remaining 40%.

Investor corner

In the recent stock market correction earlier this month, Kinaxis stock fell 15% as retail investors cashed out some profits due to delay in Canada Emergency Response Benefit (CERB). This is a good time to buy the stock at a 24% discount from its 52-week high.

Kianxis’s and Cargojet’s stock rally can double your money in three years.

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC. The Motley Fool recommends KINAXIS INC.

More on Tech Stocks

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 »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

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

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »