Got $1,000? Buy These 3 Growth Stocks for Superior Returns

Given their healthy growth potential and discounted valuation, I am bullish on these three growth stocks.

Growth stocks will grow their financials higher than the industry average. So, these companies tend to deliver superior returns over the long run. However, these companies require higher capital to fund their growth initiatives. With the central bank expected to tighten money supplies, growth stocks have witnessed a significant pullback over the last few months. Meanwhile, the correction presents an excellent entry point for long-term investors. If you want to add growth stocks to your portfolios, here are my three top bets.

Waste Connections

Waste Connections (TSX:WCN)(NYSE:WCN), which had delivered impressive returns of 160% over the last five years at a CAGR of 21%, is under pressure this year amid the weakness in growth stocks. It has lost 11.4% of its stock value. However, the company had delivered a solid fourth-quarter performance yesterday, with its revenue and adjusted EPS increasing by 16.2% and 22.1%, respectively.

In 2021, Waste Connections had completed acquisitions worth $400 million, which could contribute 6% of financial growth in 2022. Combining the growth with a 6.5% price rise, the company’s revenue, adjusted EBITDA, and adjusted free cash flows in 2022 could increase in double digits. Further, the company expects to make a capital expenditure of $850 million, generating an adjusted free cash flow of $1.15 billion. So, given its healthy growth prospects and a discounted stock price, I am bullish on Waste Connections.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) has been one of the top performers over the last 14 months, with returns of 83% since the beginning of 2021. The increase in oil prices and its strong performances have driven its stock higher. Oil prices are currently trading well above $90/barrel. With the continuing tension between Russia and Ukraine, analysts expect oil prices to strengthen further.

Given its long-life, low-decline assets, Suncor Energy could cover all its operating expenses, sustaining capital investments, and dividends at WTI oil trading at $35/barrel. So, with oil prices trading well above those levels, the company’s margin could widen. Further, the company expects to increase its upstream production by 5%. The refineries utilization could also increase amid the rising demand for petroleum products. So, Suncor Energy’s outlook looks healthy.

However, the company is still currently trading below its pre-pandemic levels, with its forward price-to-earnings multiple standing at an attractive 7.9. So, Suncor Energy would be an excellent buy right now. 

Docebo

Docebo (TSX:DCBO)(NASDAQ:DCBO) had a solid beginning as a public company amid a surge in demand due to the pandemic. However, with the easing of restrictions and expectation of interest rate hikes, its stock price has declined by 39.7% from its September highs. Investors fear that the demand for the company’s products and services could decrease with the reopening of the economy.

However, I believe the steep correction has provided an excellent entry point for long-term investors. E-learning systems are becoming popular among business enterprises due to their cost effectiveness. So, I expect the demand for the company’s products and services to sustain even after the pandemic. Further, the company has been growing its recurring revenue at a CAGR of 65% over the last five years, which is encouraging. Supported by its innovative products, the company is expanding its customer base and average contract value at a healthier rate. So, its outlook looks healthy.

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 recommends Docebo Inc. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Investing

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 »

stock research, analyze data
Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

There are opportunities and risks on the horizon for the Canadian banks.

Read more »

Young Boy with Jet Pack Dreams of Flying
Stock Market

Is Air Canada Stock a Good Buy After Its Q3 Results

Down almost 60% from all-time highs, Air Canada is an undervalued TSX stock that remains an enticing investment in November…

Read more »

cloud computing
Investing

Where to Invest $10,000 in November

Given their solid underlying businesses and healthy growth prospects, I expect these two defensive stocks to outperform uncertain outlook.

Read more »

coins jump into piggy bank
Retirement

Here’s the Average RRSP Balance at Age 44 for Canadians

Holding stocks like Alimentation Couche-Tard (TSX:ATD) in an RRSP is a good way to build your wealth.

Read more »

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »