3 TSX Stocks to Buy Right Now for Multi-Fold Returns

Given their increasing addressable market and increase in their market share, these three TSX stocks can deliver multi-fold returns in the long run.

| More on:

The Canadian equity markets are on a strong upward momentum this month, with the S&P/TSX Composite Index rising 11.4% amid the encouraging developments on the vaccine against COVID-19. Meanwhile, the economic outlook is still weak, with a high unemployment rate and timid real gross domestic product numbers. The disconnect between the economy and the stock market could lead to a correction in the stock market.

However, the following three TSX stocks could continue to rise and deliver multi-fold returns over the long run, given their impressive growth prospects.

Lightspeed POS

After bottoming out in March, Lightspeed POS’s (TSX:LSPD)(NYSE:LSPD) stock price has increased by over 550%. Amid the pandemic, many small- and medium-scale retailers and restaurants shifted towards omnichannel commerce platforms, driving the demand for the company’s products and services.

Lightspeed POS has increased its customer locations by 68% in the last four quarters to 80,000 by the end of the recently announced second quarter. Its GTV (gross transaction value) rose 56% year over year to $8.5 billion. Along with organic growth, the acquisition of Gastrofix and Kounta contributed to the company’s GTV growth.

The demand for the company’s services could sustain in the post-pandemic world, as a structural shift towards omnichannel solutions has created a multi-year growth opportunity. Lightspeed POS is also focusing on innovation and expanding its product suite, which could support its growth.

Meanwhile, Lightspeed POS is also looking at strategic acquisitions to expand its footprint and increase its customer base. The company’s strong liquidity position could support its acquisitions. So, given its growing addressable market and expanding market share, I expect the upward momentum in its stock price to continue.

Goodfood Market

The social-distancing and work-from-home restrictions amid the pandemic benefited the online grocery and meal kit delivery company, Goodfood Market (TSX:FOOD). Its top line grew 85% in its recently reported quarter. The addition of new customers, higher average order value due to its expanded product offerings, and increased order rates drove its sales. Meanwhile, the improvement in operating efficiency, automation, increased density in the delivery zones, and lower incentives and credits improved its EBIDTA margin.

Meanwhile, the shift in customer preferences towards online delivery and expansion in customer base has created a long-term growth prospect for Goodfood Markets. The company is also focusing on expanding its production capacity, investing in automation, increasing its product offerings, and expanding its product offerings across the country to increase its market share. Meanwhile, the improvement in efficiency and economies of scale could support its margin expansion.

This year, Goodfood Markets’s stock price has increased by 184%. However, given its large addressable market and increasing market share, the company can deliver multi-fold returns in the long run.

Cargojet

My third pick would be an air cargo company, Cargojet (TSX:CJT), which transports approximately 90% of Canada’s domestic air cargo volumes. Given its array of 27 aircraft and unique overnight delivery service, the company has acquired a significant share in the air cargo service. Further, the company earns 75% of its revenue through long-term contracts, delivering predictable earnings and cash flows.

Now, e-commerce sales form just 5% of Canada’s retail sales, indicating a significant expansion scope. So, the growth in e-commerce sales could drive the demand for Cargojet’s service. Further, the air cargo business is a capital-intensive business, which provides a natural barrier against new entrants.

Amid the recent pullback, Cargojet is currently trading at 12.4% lower from its 52-week low. Its valuation also looks attractive, with its forward price-to-earnings multiple trading at 31. Of the 12 analysts that follow Cargojet, eight have given a “buy” rating, while the remaining four have given a “hold” rating.

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.

The Motley Fool owns shares of and recommends CARGOJET INC. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends Goodfood Market. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. 

More on Tech Stocks

investment research
Tech Stocks

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

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

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

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »