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How to Invest in Growth Stocks

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Three major factors make up a growth stock: strong historical earnings growth, strong forward earnings growth, and strong stock performance. However, companies that have just been publicly listed with no historical earnings to show but with the excellent potential to flourish are also growth stocks.

Nutrien (TSX:NTR)(NYSE:NTR), Goeasy (TSX:GSY), and Lightspeed (TSX:LSPD) are growth stocks you can buy today — and you can stay invested in the stocks for a longer period to maximize capital gains.

Surprising growth

Nutrien is already expecting an excellent 2020 while analysts are forecasting a potential upside of 29%. You could feast on high returns in the coming months if you factor in the stock’s 3.64% dividend yield.

The world’s top fertilizer maker withstood a tough crop-planting season and the worst nine months weather period in North America. Despite the harsh conditions, however, Nutrien’s potash and nitrogen business delivered excellent results.

Potash EBITDA went up by 42% in the first half of the year versus last year. Nitrogen EBITDA rose by 17% because of increased earnings from Nutrien’s equity investments, higher realized prices, and lower North American gas prices in North America.

Nutrien has plenty of growth in the sack. The company is moving to transform the business through scale, efficiency, and digital leadership. With both organic and inorganic growth initiatives underway, the company expects retail earnings to grow by around 60% over the next five years.

Consistent growth

A certified growth stock is the leading provider of financial services for non-prime Canadians. Goeasy, the $736.9 million alternative lender, deserves a place in a growth investor’s portfolio.

The company boasts of 18 consecutive years of profitable revenue growth. As of August 15, 2019, Goeasy’s Easyfinancial division has surpassed a $1 billion consumer loan portfolio. A significant milestone since the first kiosk opened in 2006.

Jason Mullins, Goeasy’s President & CEO said, “This accomplishment, which has been thirteen years in the making, is a true testament to the passion and dedication that our entire team has for improving the lives of our customers.”

About 60% of Goeasy clients improved their credit scores and graduated to prime credit within a year of borrowing from Easyfinancial.

According to Mullins, Goeasy’s future remains more exciting than ever. Management plans to accomplish the next billion consumer loan portfolio in less than four years. The goal is to dominate Canada’s non-prime consumer credit market.

Rapid growth

It’s been only a little over five months since the market debut of Lightspeed, but the software maker for restaurants and retailers is still sizzling hot to this day. The tech stock is up 105.77% year to date.

Lightspeed is in a rapidly expanding industry, and the price has the potential to double in five years, provided the growth rate is 15%. If not, then LSPD is not a legitimate growth stock. That said, I’m confident that the biggest IPO by a Canadian tech firm in nine years can deliver over 15% growth rate.

POS systems are the “in” thing. Transactions are safe and more convenient for customers and merchants. This next super tech stock won’t disappoint investors.

Capital appreciation

Growth stocks are good investments. Nutrien, Goeasy, and Lightspeed are in a period of vigorous expansion. You can expect rapid growth in earnings and sales plus huge price moves from the stocks.

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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 Christopher Liew has no position in any of the stocks mentioned. Nutrien is a recommendation of Stock Advisor Canada.


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