2-for1 Sale
On Friday, the chairman of the Federal Reserve of the United States indicated that the economy remained strong while consumer spending was robust. He added that the bank would be cautious during future rate hikes. Amid these favourable comments, the global equity markets rose in the last two trading days, with the S&P/TSX Composite Index increasing by 1.26%. Amid improving investors’ sentiments, you can buy the following three growth stocks without hesitation.
goeasy
First on my list is goeasy (TSX:GSY), which has grown its revenue and adjusted EPS (earnings per share) at a CAGR (compound annual growth rate) of 17.7% and 29.5% for the last 10 years. Strong organic growth and strategic acquisitions have boosted its financials. Meanwhile, despite the challenging environment, the subprime lender has maintained its upward momentum this year. Its revenue and adjusted EPS grew by 22% and 62.4% in the first six months.
Its net charge-off rate declined by 10 basis points to 9% during the period. Meanwhile, its provisions for future loan losses decreased to 7.42% in the second quarter compared to 7.48% in the previous quarter. goeasy is also updating its products, pricing, and cost structures to lessen the impact of reducing the maximum allowable interest rate to an annual percentage rate (APR) of 35% from 47%.
Besides, the management expects its loan portfolio to reach $5.1 billion by 2025, a 60% growth from its June 30th levels. Amid the expansion of its loan portfolio, the management hopes to grow its revenue at an annualized rate of 18.5% through 2025 while delivering a return on equity of over 21% annually. Notably, the company trades at 1.5 times its projected revenue for the next four quarters and offers a forward dividend yield of 3.04%. Considering all these factors, I am bullish on goeasy.
WELL Health Technologies
Another growth stock I am bullish on would be WELL Health Technologies (TSX:WELL), a tech-enabled healthcare company that empowers healthcare professionals to offer omnichannel services. Meanwhile, the company has continued to drive its financials. In the June-ending quarter, the company’s revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 21.8% and 5.1%, respectively. The digital healthcare company had over one million patient visits and over 1.5 million patient interactions during the quarter.
After reporting its second-quarter performance, WELL Health’s management expects its 2023 revenue to reach the upper end of the earlier announced guidance of $740-$760 million. The management also expects its adjusted EBITDA to increase by 10% from 2022 levels. The company offers a multi-year growth potential due to the growing adoption of telehealthcare services, innovative product development, and continued acquisitions. However, WELL Health trades at 1.2 times its projected sales for the next four quarters, which looks cheap considering its growth prospects.
Shopify
Shopify (TSX:SHOP), which provides essential omnichannel infrastructure for all businesses, would be my final pick. After a challenging last year, the company is witnessing a healthy buying this year, with its stock price rising by around 63%. In the first two quarters of this year, the company’s revenue grew 28.1%. Growth across both its segments, subscription and merchant, drove its top line. Its net losses also declined from $2.68 billion to $1.24 billion, which is encouraging.
Meanwhile, the broader shift towards an omnichannel selling model has created a multi-year growth potential for Shopify. Amid the growing addressable market, the omnichannel service provider is working on launching innovative product offerings, growing its customer base, and expanding its products’ reach, which could continue to drive its financials in the coming years. Despite the recent upward momentum in its stock price, Shopify trades at a considerable discount compared to its 2021 highs, offering an excellent entry point for long-term investors.
