3 Top “High-Ceiling” Stocks to Buy in November

Tired of weak returns? This trio of growth stocks, including Cargojet Inc. (TSX:CJT), might have the upside potential you need.

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Hello again, Fools. I’m back to highlight three companies with rapidly growing revenue and earnings. In case you’re wondering, I do this because high-growth stocks

  • have a better chance of delivering massive life-changing returns than the overall market; and
  • often provide portfolio protection during a downturn (as investors flock to recession-proof growth opportunities).

Market volatility has returned with a vengeance. So, it might be the perfect time to seek out exceptional, market-independent growth plays to help cope with it — in other words, find stocks with a very “high ceiling.”

Without further ado, let’s get to this week’s list.

STEP in the right direction

Kicking things off is STEP Energy Services (TSX:STEP), which has grown its revenue and earnings at a whopping rate of 626% and 171%, respectively, over the past three years. Shares of the oilfield services specialist are down 63% year to date versus a loss of 14% for the S&P/TSX Capped Energy Index over the same time frame.

Volatile oil prices continue wreak havoc with the stock, but there’s plenty of reason to remain bullish. Over the first half of 2018, STEP generated record revenue of $372.2 million — an increase of 67% compared to 2017. And while weather-related delays forced some work to be rescheduled, management expects high utilization for the second half of 2018.

STEP’s high debt load isn’t for risk-averse investors. But the long-term upside coupled with a depressed stock price make STEP an enticing opportunity.

Jet setter

Next up, we have Cargojet (TSX:CJT), whose revenue and income have increased 463% and 33%, respectively, over the past three years. Year to date, shares of the overnight air cargo company are up 36% versus a gain of just 5% for the S&P/TSX Capped Industrials Index.

While the stock’s momentum might turn off value-oriented investors, I wouldn’t bet on a slowdown anytime soon. In Q2, adjusted EBITDA increased 17%, as revenue jumped 24% to $109 million. Meanwhile, gross margins expanded 9.4% over 2017. In other words, management continues to execute quite well in its goal to improve utilization and maximize profitability.

With a P/E of above 40, the stock isn’t cheap. But given how stable and predictable Cargojet’s growth is becoming, the shares might be worth paying up for.

Great Canadian growth

Closing things out is Great Canadian Gaming (TSX:GC), which has grown its top and bottom line by 83% and 49%, respectively, over the past three years. After a strong first half of 2018, shares of the casino operator are down 10% during the past three months.

Bay Street is becoming increasingly concerned that Great Canadian’s recent GTA Bundle-fueled results aren’t sustainable long term. Of course, this might be the perfect time to capitalize on those worries. The stock now sports a cheapish forward P/E of 14, along with single-digit EV/EBITDA multiple.

For a company growing so rapidly and that generates so much cash — trailing 12-month free cash flow clocks in at $209 million — that valuation seems too attractive to pass up.

Fool on.

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 Brian Pacampara owns no position in any of the companies mentioned.   

More on Investing

Money growing in soil , Business success concept.

2 Undervalued Stocks to Buy With Years of Growth Potential

These two top Canadian growth stocks are some of the best to buy and offer some of the most attractive…

Read more »

calculate and analyze stock

Market Correction: 3 Dirt-Cheap Dividend Stocks to Buy Now

Investors traversing this market correction may want to snatch up cheap dividend stocks like Emera Inc. (TSX:EMA) to start the…

Read more »

data analyze research
Energy Stocks

Market Correction: 2 Dividend Stocks to Hold for Dear Life

These two top defensive dividend stocks could provide you with a degree of protection through the current market downturn.

Read more »

Dividend Stocks

TFSA Passive Income: 3 Undervalued, High-Yield TSX Dividend Stocks to Buy Now

These top TSX dividend stocks with high yields now look attractive to buy for TFSA passive income.

Read more »

Growing plant shoots on coins

Got $500? 3 Ridiculously Cheap Growth Stocks That Could Help You Retire Rich

These three growth stocks are hard to ignore at today’s prices. With just $500, investors can own all three companies…

Read more »

Electricity high voltage pole and sky
Dividend Stocks

2 High-Dividend TSX Utilities Stocks to Buy Today

The TSX utility sector has some great high-yield stocks to buy.

Read more »

A close up image of Canadian $20 Dollar bills

Canadians: A Top Passive Investment for Big Passive Income

BMO Canadian High Dividend Covered Call ETF (TSX:ZWC) is a top passive-income play for Canadians to buy on recent weakness.

Read more »

Retirement plan
Dividend Stocks

Retirement Planning: Now Is the Time to Buy Dividend Stocks

2022 could be a great time to buy quality dividend stocks at attractive discounts. Prioritize your capital allocation now.

Read more »