Proper retirement planning could help you maintain your lifestyle during retirement. Meanwhile, planning early for your retirement could help harness the power of compounding while also increasing your risk appetite.
Growth stocks grow their financials above the industry average, thus delivering higher returns in the long run. However, these companies have been under pressure this year amid rising interest rates and an uncertain economic outlook. So, young investors can utilize these corrections to add the following three growth stocks to their retirement portfolios to reap higher returns in the long run.
goeasy
goeasy (TSX:GSY) is an alternative finance company that offers lending and leasing services to subprime customers. Supported by the highly fragmented subprime lending market and its solid distribution network, the company has been growing its revenue and adjusted EPS (earnings per share) in double digits for the last 20 years. Despite the substantial growth, the company has acquired less than 3% of its addressable market (loans under $50,000). So, the company has considerable scope for expansion.
Meanwhile, goeasy posted record loan originations of $641 million in the September-ending quarter, expanding its loan portfolio to $2.59 billion. Strong demand, expanded product offerings, and new channel acquisitions drove its loan originations. Meanwhile, the company’s management projects its loan portfolio to reach $4 billion by the end of 2024, representing a 54% increase in its loan portfolio. The expansion of the loan portfolio could grow its revenue at a CAGR (compound annual growth rate) of 15.2% while expanding its gross margin at an annualized rate of 100 basis points. So, the company’s outlook looks healthy.
Amid the recent selloff in growth stocks, goeasy corrected around 36% from its 52-week high. Its NTM (next 12-monts) price-to-sales ratio has declined to an attractive 1.6. The company rewards its shareholders by raising the dividend at a healthy rate. Its yield for the next 12 months stands at 3.15%. So, considering all these factors, I believe goeasy is an excellent addition to your retirement portfolio.
Nuvei
Nuvei (TSX:NVEI) is a fintech company that allows businesses to accept next-generation payments through its modular, flexible, and scalable technology. Despite the challenging economic conditions, the company has continued its growth, with its total volume growing by 30% in the September-ending quarter. Its revenue grew by 7% while its adjusted EPS increased marginally to $0.43.
Meanwhile, the increased adoption of the omnichannel selling model has created a long-term growth potential for Nuvei, which supports 586 alternative payment methods. The company has strengthened its architecture and infrastructure to improve the speed of transactions. Also, the company expanded its “Nuvei for Platforms,” which would allow its customers to embed payments to their platforms, to customers across the world last month.
The company also strengthened its presence in the United States gaming market by acquiring licenses in Maryland and Kansas. So, the company’s growth potential looks healthy. Despite its high growth prospects, Nuvei trades at a cheaper NTM price-to-earnings ratio of 13.9, making it an attractive buy.
Docebo
My final pick is Docebo (TSX:DCBO), which offers artificial intelligence-powered e-learning solutions to customers worldwide. Supported by expanding customer base and increasing average contract value, the company has maintained its growth this year, despite the volatile environment. Its revenue grew by 39.7% in the first three quarters, while its net profits came in at $5.4 million compared to a net loss of $12.2 million in the previous year.
Meanwhile, I expect the company’s financial growth to continue as the e-learning market expands amid businesses’ growing adoption of digital tools across various industries and greater internet penetration. Meanwhile, Global Market Insights projects the e-learning market could grow at an annualized rate of 20% through 2028. Despite its healthy growth prospects, the company trades 49% lower than its 52-week high. So, given its healthy growth prospects and discounted stock price, I expect Docebo to outperform the broader equity market in the long run.
