Growth stocks have the potential to deliver superior returns in the long run, given their growth potential. These companies require higher capital to fund their growth initiatives and trade at higher valuations. However, they have been under pressure over the last 18 months amid rising interest rates. Meanwhile, the correction has provided an enticing entry point in the following three stocks, which offer impressive long-term growth prospects.
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BlackBerry
BlackBerry (TSX:BB) is one of the top growth stocks to have in your portfolio due to its presence in high-growth segments, such as IoT (Internet of Things) and cybersecurity. The company’s QNX platform runs in over 235 million vehicles, representing a 20 million increase from the previous year. Besides, the company has now launched a highly scalable, advanced QNX platform that could assist in developing software applications for next-generation vehicles and IoT systems.
Also, the company is witnessing sequential revenue growth in its cybersecurity segment alongside solid performance from its core verticals. The cybersecurity solutions provider has launched an artificial intelligence-based cybersecurity solutions portfolio, which could further strengthen its position in the segment.
Notably, McKinsey projects that the convergence of IoT and cybersecurity could create an addressable market of $750 billion by 2030. Given its substantial presence in both segments, the company is well-positioned to benefit from this market expansion. So, I believe BlackBerry would be an excellent long-term buy.
Nuvei
Second on my list would be Nuvei (TSX:NVEI), which witnessed a steep sell-off last week after reporting a mixed second-quarter performance. It posted revenue of $307 million, representing a 45% increase from its previous year’s quarters. However, its adjusted EPS (earnings per share) fell from $0.51 to $0.39. The steep increase of $31.3 million in its finance expenses dragged its net profits down. Following the weak second-quarter earnings, the company’s management slashed its 2023 guidance, triggering a sell-off.
However, the long-term growth prospects of the payment processing company look healthy amid the growing adoption of digital payment methods. It is focusing on developing innovative products and expanding its APM (alternative payment methods) portfolio to grow its customer base. The company also grew its payments channel by adding two prominent integrated software vendors in North America.
Boosted by these growth initiatives, Nuvei’s management expects its revenue to grow by 15%–20% in the medium term. The management also hopes to achieve an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of over 50% in the long term. Despite its healthy growth prospects, NVEI stock trades at 8.9 times projected earnings for the next four quarters, making it an attractive buy.
goeasy
goeasy (TSX:GSY) is another growth stock I am bullish on owing to an expanding loan portfolio and attractive valuation. In the June-ending quarter, the company posted loan originations of $667 million, raising its loan portfolio to $3.2 billion. Its net charge-off rate stood at 9.1%, within the management’s 8–10% guidance. Driven by solid operating performance, its revenue and adjusted EPS grew by 20% and 16%, respectively.
Additionally, the subprime lender has provided optimistic guidance for the next three years, with its loan portfolio projected to grow by 60% from its current levels to $5.1 billion in 2025. Besides, its revenue could also increase at a CAGR (compound annual growth rate) of 18.5% through 2025 while posting a yearly return on equity of above 21%. GSY stock pays a quarterly dividend with its forward yield at 2.87% and trades at an NTM (next 12 months) price-to-sales multiple of 1.6, making it an attractive buy.
