Don't Miss AI's Third Wave
Investing in high-risk growth stocks is not easy for every Canadian investor to stomach, especially after the last few years of full market volatility. However, it was only a matter of time before the stock market would go through a turnaround, and that is exactly what might be on the cards right now.
After showing largely sideways movement between 2022 and the end of 2023, the S&P/TSX Composite Index is showing signs of new life. As of this writing, the Canadian benchmark index is up by 14.35% year to date, reaching new all-time highs almost daily for the last few weeks. The much-anticipated cut in key interest rates has spurred the stock market into an upward rally.
Today, I will discuss three risky but high growth potential investments you should watch closely against this backdrop.
Real Matters
Real Matters (TSX:REAL) is a $639.02 million market capitalization network management services provider, primarily working for the mortgage lending and insurance industries. Operating in Canada and the U.S., it derives most of its revenue from its U.S. Appraisal segment, providing mortgage appraisals for purchase, refinance, and home equity transactions.
With institutional investors making up around 45.1% of its ownership stake and just below 50% of its being held by the general public, it can be reasonable to believe that experts see real potential in the stock.
As of this writing, the stock trades for $8.69 per share. While down by over 73% from its August 2020 all-time high, Real Matters stock has picked up pace on the stock market recently. It is up by 38.38% year to date.
Sangoma Technologies
Sangoma Technologies (TSX:STC) is a $258.66 million market capitalization, Markham-based Canadian company that offers communications-as-a-service products to businesses. It provides hardware and software that enable communications for companies.
It develops, manufactures, distributes, and supports voice and data connectivity components, with most of its clients based in the U.S. and Canada, along with a few international markets.
Between August 20 and September 18, its share prices shot up by 21.15%. As of this writing, it trades for $7.76 per share, up by a massive 158% from its 52-week low. The last three years have seen Sangoma Technologies increase its revenue at a 22% compounded annual growth rate, yet its share prices only recently started rallying after the interest rate cut.
The recent uptick in its share prices might indicate that the market is slowly starting to realize its long-term value. However, it might be too early to say that this signals sustained long-term gains.
Evertz Technologies
Evertz Technologies (TSX:ET) is a $913.37 million market capitalization company headquartered in Burlington that develops software and hardware products for the broadcast and film industry.
The equipment it makes comes into use in production, post-production, and the transmission of television content. Broadcasters, content creators, and service providers seeking multi-channel digital and high-definition television content purchase its products.
Generating most of its revenue from the U.S., the company’s earnings per share is expected to grow by 2.3% over the next year. However, its high 91% payout ratio for its dividends yielding 6.50% does make it seem like a risky investment. As of this writing, ET stock trades for $12 per share, up by 5.35% from its 52-week low.
Foolish takeaway
Interest rate cuts act like an adrenaline shot for equity securities. For investors seeking riskier investments with higher growth potential, now might be the time to consider allocating some cash. If you have a well-balanced portfolio and want to take some risk, these three TSX tech stocks can be worth considering right now.
