Hello, 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 double your TFSA over the next five years, this is a good place to start.
Leading off our list is Points International (TSX:PTS)(NASDAQ:PCOM), which has grown its EPS and revenue at a rate of 145% and 72%, respectively, over the past five years. Shares of the e-commerce platform are up about 60% over the past year.
Points’ long-term growth should continue to be supported by strong e-commerce tailwinds and a firm leadership position in loyalty currency management.
Just last week, for example, the company said it expects Q4 gross profit of $17.3 million-$17.7 million with adjusted EBITDA of $6.8 million-$7.2 million — both quarterly records.
“We continue to drive this performance by executing on our three core growth drivers — building robust pipelines and signing new partnerships, up-selling and cross-selling existing partnerships, and driving growth in existing services through advanced data analytics and automated marketing initiatives,” said CEO Rob MacLean.
Points shares trade at a forward P/E in the low-40s.
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Next up, we have Waste Connections (TSX:WCN)(NYSE:WCN), which has grown its EPS and revenue at a rate of 99% and 194%, respectively, over the past five years. Shares of the waste management giant have risen about 20% over the past year.
Waste Connections’ impressive growth is underpinned by massive scale, smart acquisitions and a laser-like focus on exclusive markets. In the most recent quarter, free cash flow jumped 13% to $763 million as revenue increased 10% to $1.4 billion.
Based on that strength, management also upped the quarterly dividend 16%.
“Strong organic growth in solid waste and a sequential increase in E&P waste activity enabled us to deliver better than expected results in the period,” said CEO Worthing Jackman.
Waste Connections shares sport a comforting beta of 0.5.
Easy does it
Rounding out our list is goeasy (TSX:GSY), which has delivered EPS and revenue growth of 230% and 116%, respectively, over the past five years. Shares of the alternative lender are up roughly 80% over the past year.
Goeasy continues to lean on its scale advantages (over $3.6 billion in originated loans), firm position in the subprime space, and lending tailwinds to deliver strong results for shareholders. In the most recent quarter, income jumped 38% to $14 million as revenue increased 20% to $130 million.
Moreover, the company’s loan portfolio increased from $750 million to $1.04 billion during the quarter.
“We saw positive momentum from our new branded media campaign, which drove a 25% increase in loan application volume and a second straight quarter of record new customers, resulting in a 20% increase in loan growth over the prior year,” said CEO Jason Mullins.
Goeasy trades at a forward P/E in the low-teens.
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.
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.
Brian Pacampara owns no position in any of the companies mentioned.