3 Growth Stocks to Buy Under $20

These three under-$20 growth stocks could deliver superior returns in the long run.

| More on:
jar with coins and plant

Source: Getty Images

After a weak beginning this month, the Canadian equity markets have bounced back strongly, with the S&P/TSX Composite Index hitting a new all-time high on August 23. The chairman of the Federal Reserve of the United States has recently indicated that interest rate cuts are on the horizon, raising investors’ confidence and driving the equity markets higher. Amid improving optimism, I believe the following three growth stocks under $20 could deliver superior returns.

WELL Health Technologies

WELL Health Technologies (TSX:WELL) is a digital healthcare company that helps healthcare practitioners deliver positive patient outcomes. In the second quarter, the company signed a five-year agreement with Microsoft to enhance digital healthcare across North America. The partnership would strengthen WELL Health’s cloud infrastructure, optimize expenses, and tighten data security to expand healthcare solutions.

Further, it continued expansion by acquiring 10 clinics operated by Shoppers Drug Mart. It has substantially invested in artificial intelligence (AI) to develop innovative products. These initiatives, along with its expanding customer base and various cost-cutting initiatives, could boost its financials in the coming quarters.

Meanwhile, WELL Health’s management has raised its 2024 guidance after posting its second-quarter earnings earlier this month. The management projects its top line to come between $970 million and $990 million, with the midpoint representing a 26.3% increase from the previous year. The midpoint of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) guidance represents a 12.4% growth from the previous year. Despite these healthy growth prospects, the company trades at an attractive NTM (next-12-month) price-to-sales multiple of 1.1, making it an attractive buy.

Savaria

Savaria (TSX:SIS) provides accessibility solutions with manufacturing facilities spread across North America, Asia, and Europe and a worldwide dealer network. The company’s top line grew by 5.1% in the first six months amid solid organic growth and favourable currency translation. Its gross margins expanded by 290 basis points to 33.9%. Besides, its adjusted EBITDA and adjusted EPS (earnings per share) have increased by 26.7% and 16.1%, respectively. Its solid performances have boosted investors’ confidence, driving its stock price 33.7% higher.

Meanwhile, I expect the demand for accessibility solutions is rising amid the aging population and increasing income levels. The company has adopted a multi-year Savaria One initiative, which it expects to unlock its full potential. Moreover, the company’s management expects its top line to reach $1 billion next year, representing a 19.5% increase from 2023. Its adjusted EBITDA margin could touch 20%, a substantial improvement from 15.5% in 2023. So, its growth initiatives look healthy. It also pays monthly dividends, with a forward yield of 2.61%, and trades at an attractive NTM price-to-earnings multiple of 18.8, making it an ideal long-term buy.

Lightspeed Commerce

Lightspeed Commerce (TSX:LSPD), which provides commerce solutions to businesses worldwide, is my third pick. Earlier this month, it reported an impressive first-quarter performance for fiscal 2025, with its topline growing by 27%. New customer wins and average revenue per user expansion by 31% drove its sales. Besides, it reported an adjusted EBITDA of $10.2 million, representing a substantial improvement from a loss of $7 million in the previous year’s quarter. With its cash and cash equivalents at $673.9 million, it is well-positioned to fund its growth initiatives.

Further, the company continues to launch innovative products and expand its unified POS (point of sales) and payments platform, which could boost its financials in the coming quarters. For this fiscal year, Lightspeed Commerce’s management projects its top line to grow by 20% while its adjusted EBITDA will be over $45 million. Despite its solid first-quarter performance and healthy growth prospects, the company is trading at a 37.8% discount compared to its 52-week high. Its valuation looks cheap, with its NTM price-to-sales multiple at 1.7, making it attractive for long-term investors.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

More on Investing

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Canadian National Railway Stock is on Sale: Why Now is the Time to Invest

CNR stock has long been a top stock, with a solid position in a railway duopoly. But right now is…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

This 7.9% Dividend Stock Pays Cash Every Month

We all want dividends, and having them come out monthly is ideal! But this might be a strong choice for…

Read more »

A plant grows from coins.
Investing

2 Undervalued Growth Stocks to Buy Right Now

Growth stocks may sound riskier, but these two are in the midst of perhaps a humongous recovery.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

Is Northland Power Stock a Buy for its 6% Dividend Yield

Northland Power stock is cheap and ready to move higher as major projects near completion. In the meantime, we have…

Read more »

data analyze research
Stocks for Beginners

The Best TSX Stocks for Canadians to Buy With $700 on Hand

These TSX stocks may not cost much but can provide you with stability as well as growth like no other…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Investing

The Best Stocks to Invest $2,000 in Right Now

Here are two of the best stocks I think long-term investors may want to use as building blocks for a…

Read more »

A worker drinks out of a mug in an office.
Investing

The 3 Best Growth Stocks to Buy in Canada Right Now for the Long Haul

These three growth stocks just saw a super-sized surge after strong earnings. But let's get into why they belong in…

Read more »

space ship model takes off
Dividend Stocks

3 Top Canadian Stocks That Just Increased Their Dividends (Again)!

These three top Canadian stocks just increased their dividend. No surprise since they have a great record of growing earnings…

Read more »