Hi, Fools. I’m back to draw attention to three attractive growth stocks. Why? Because companies with rapidly growing revenue and earnings
- have far more appreciation potential than the average stock; and
- can help you outperform during bad times as investors flock to truly special growth stories.
As legendary investor Warren Buffett once said, “Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio’s market value.”
So, if you’re looking to give your TFSA a massive boost in 2020 (with minimal downside), this is a good place to start.
Web wonder
Leading off our list is Tucows, which has grown its EPS and revenue at a rate of 195% and 176%, respectively, over the past five years. Shares of the internet services specialist are down about 9% in 2019.
Tucows’s growth should continue to be supported by reliable earnings increases, a dominant position in the wholesale domain space, and mobile expansion opportunities. In the most recent quarter, EPS of $0.40 topped estimates by $0.07 as revenue improved 5.5% to $88 million.
“The third quarter was highlighted by solid financial performance, with year-over-year growth in revenue, gross margin and adjusted EBITDA, as we continued to execute on our strategic priorities in each component of the business,” said CEO Elliot Noss.
Tucows currently trades at a P/E in the mid-40s.
Game on
Next up, we have Great Canadian Gaming, which has grown its EPS and revenue at a rate of 209% and 207%, respectively, over the past five years. Shares of the casino operator are off 19% over the past year.
Disappointing results and debt concerns have weighed on the stock in 2019, but Great Canadian has plenty of operating momentum heading into 2020. In the most recent quarter, for example, adjusted EBITDA improved to $142 million as revenue increased 2.5% to $341 million.
“During the quarter, we continued to make progress with our Ontario developments,” said CEO Rod Baker. “We introduced new food and beverage offerings at several of our properties to complement gaming and improve guest experiences.”
Great Canadian trades at a P/E of 12.
Taking flight
Rounding out our list is CAE, which has delivered EPS and revenue growth of 68% and 63%, respectively, over the past five years. Shares of the aviation training specialist are up 28% over the past year.
CAE continues to lean on its leadership position in aviation training, high degree of recurring revenue, and strong secular tailwinds to deliver impressive results for shareholders. In the most recent quarter, profits jumped 22% as revenue improved 21% to $897 million.
“Performance was led by Civil with 60% operating income growth and higher margins, and continued good momentum signing long-term training agreements with our airline partners,” said CEO Marc Parent.
CAE shares currently trade at a P/E of 27.
The bottom line
There you have it, Fools: three attractive growth stocks for 2020.
They aren’t formal recommendations. Instead, view them as ideas worth further research. Even stocks with breakneck growth can crash hard if you don’t pay attention to valuation, so plenty of due diligence is still required.
Fool on.
