With inflation in Canada declining to a 27-month low of 2.8% in June, investors are optimistic that the Bank of Canada will ease its monetary tightening initiatives. Amid improving investor confidence, the S&P/TSX Composite Index trades 3.7% higher than its June lows. However, the following three growth stocks are still trading at a substantial discount from their all-time highs, thus offering excellent buying opportunities on the back of improving investor sentiments.
goeasy
First on my list would be goeasy (TSX:GSY), which offers leasing and lending services to subprime customers. The company has witnessed healthy buying this year amid its solid quarterly performances and renewed interest in growth stocks. Despite the recent increases, it is still trading around 40% lower than its all-time highs. Besides, its valuation looks attractive, with the company currently trading at 9.1 times analysts’ projected earnings for the next four quarters, which looks cheap considering its growth prospects.
The sub-prime lender is focusing on upgrading its products, pricing, and cost structures to minimize the impact of lowering the maximum allowable interest rate to an annual percentage rate (APR) of 35% from 47%. Besides, the expanding customer base, strategic initiatives, and strong performances across verticles could continue to boost its financials in the coming years. Management projects its loan portfolio to reach $5.1 billion by the end of 2025, representing 70% growth from its current levels. The expansion could boost its topline while keeping its net charge-off rate within its guidance.
Additionally, goeasy has boosted shareholders’ returns by raising dividends at an impressive CAGR (compound annual growth rate) of 30.9% over the last nine years. Its forward dividend yield currently stands at 2.99%. So, considering all these factors, I believe goeasy would be an attractive buy.
BlackBerry
Second on my list would be BlackBerry (TSX:BB), which offers innovative solutions in cybersecurity, endpoint management, endpoint security, and embedded systems. The company is witnessing increased adoption of the QNX platform, with the software running in around 235 million vehicles, an increase of 9% from the previous year’s quarter. Besides, the IoT software maker has continued to earn design wins, which could boost its financials in the coming quarters.
Further, the demand for BlackBerry’s products and services is rising amid the growing popularity of electric and connected vehicles. With the launch of the general availability version of IVY (Intelligent Vehicle Data Platform), the intelligent security software firm is looking at building an IVY ecosystem. Also, in the cybersecurity space, the company witnessed sequential growth of 6% in the May-ending quarter. Notably, it is well-positioned to benefit from the growing convergence of IoT and cybersecurity. So, BlackBerry’s growth prospects look healthy.
However, BB stock currently trades over 80% lower than its 2021 highs, while its NTM (next 12 months) price-to-sales multiple stands at 3.9. Considering all these factors, I am bullish on BlackBerry.
WELL Health Technologies
Another growth stock that is trading at an attractive valuation is WELL Health Technologies (TSX:WELL), which offers a comprehensive healthcare and digital platform to help healthcare practitioners provide omnichannel services. The virtual health services provider reported a solid second-quarter performance yesterday, with a record of over 1 million patient visits. Overall, the company had 1.5 million total patient interactions amid strong growth across virtual, Canadian, and United States segments.
The company’s management hopes for record second-quarter revenue amid its solid operating performance. Meanwhile, management will be reporting its second-quarter earnings on August 10. However, they have set optimistic 2023 revenue guidance of $740–$760 million, representing over 30% growth from its previous year. Despite its healthy growth prospects, WELL Health trades at 1.4 times analysts’ projected sales for the next four quarters, making it an attractive buy.
