Investing small sums of money in the stock market can help investors create game-changing wealth over time. Moreover, investing regularly can help you take advantage of the volatility associated with stocks and benefit from the power of compounding.
For instance, if you allocate $1,000 each month towards stocks and earn 10% returns annually, your investment would balloon to $206,000 in 10 years, $765,000 in 20 years, and $2.28 million in 30 years.
Investing in low-cost index funds is the best way to gain exposure to the stock market if you want to derive steady gains. But if you want to beat the broader markets, investing in quality growth stocks is a good strategy. Here are two such TSX stocks you can buy with $1,000 in February 2024.
Payfare stock
Valued at $338 million by market cap, Payfare (TSX:PAY) stock is down 47% from all-time highs. Payfare is a financial technology company providing instant payout and digital banking solutions to gig economy workers in North America.
Payfare increased sales to $47.2 million, an increase of 35% year over year, in the third quarter (Q3) of 2023. It ended Q3 with 1.2 million active users, up 32% from the year-ago period. The company’s total gross dollar value stood at $3 billion in Q3, up 40% year over year.
Payfare reported an adjusted net income of $7.5 million or $0.16 per share, up from less than $2 million last year. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) stood at $6.3 million, up from $1 million in the year-ago period. A widening earnings base allowed Payfare to increase its free cash flow from 29% year over year to $3.6 million in the last 12 months.
Payfare was selected in two request-for-proposal processes to launch new private label and embedded finance programs for recognized strategic partners. In Q3, Payfare signed an agreement with a big-box retailer to provide earnings payouts to the retailers’ delivery gig workforce in Canada.
Payfare is forecast to end 2024 with adjusted earnings of $0.58 per share, compared to a loss of $0.06 per share in 2022. Priced at 12 times forward earnings, the TSX stock trades at a discount of 40% to consensus price target estimates.
Propel Holdings stock
The second small-cap growth stock on this list is Propel Holdings (TSX:PRL), valued at a market cap of $583 million. Propel is an online lending platform facilitating access to credit products such as installment loans and lines of credit under multiple brands.
Propel went public two years back and has since returned 80% to shareholders, after adjusting for dividends. It pays investors an annual dividend of $0.48 per share, translating to a yield of 2.8%.
Despite a tepid lending environment, Propel increased sales by 39% year over year to $83.2 million in Q3. Due to an asset-light model, its adjusted EBITDA more than doubled to $18.7 million, while net income surged by 123% to $8.5 million in the September quarter.
Analysts expect Propel to increase dividends from $0.77 per share in 2022 to $1.94 per share. Priced at nine times forward earnings, Propel is positioned to deliver outsized returns to investors in 2024 and beyond.
