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 few years, this is a good place to start.
Leading off our list is WSP Global (TSX:WSP), which has grown its EPS and revenue at a rate of 170% and 131%, respectively, over the past five years. Shares of the professional services specialist are up about 45% over the past year.
WSP’s long-term growth should continue to be supported by impressive international reach, strong scale, and steady cash flows.
In the most recent quarter, for example, earnings improved $6 million to $94 million as revenue increased 15%.
“We are pleased with our Q3 2019 performance, which following a slow start to the year in certain countries, demonstrates the resilience of our business model and the benefits stemming from our scale, and geographic and market diversification,” said CEO Alexandre L’Heureux.
WSP trades at a forward P/E in the low-20s.
Caught in the web
Next up, we have Tucows (TSX:TC)(NASDAQ:TCX), which has grown its EPS and revenue at a rate of 106% and 194%, respectively, over the past five years. Shares of the internet services specialist have fallen about 15% over the past year.
Despite poor short-term performance, Tucows’ long-term prospects are underpinned by a strong competitive position in the domain space as well as attractive mobile tailwinds.
In the most recent quarter, adjusted EBITDA jumped 25% while operating cash flow clocked in at $11.2 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 trades at a P/E in the low-60s.
Rounding out our list is CRH Medical (TSX:CRH), which has delivered EPS and revenue growth of 600% and 21%, respectively, over the past five years. Shares of the gastroenterology (GI) device and services specialist are up roughly 30% over the past year.
CRH continues to lean on its leadership position in the GI-focused anesthesia space, robust cash flow generation, and strong secular trends to deliver consistent results for shareholders. In the most recent quarter, total revenue improved 6% to $30.4 million as anesthesia patient cases jumped 23.6%.
“We continued to produce solid financial results in the third quarter,” said Tushar Ramani. “We completed two transactions during the quarter and have an increasing number of deals pending closing or in the final stages of negotiation.”
CRH trades at a forward P/E of 41.
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.
Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Tom Gardner owns shares of Tucows. The Motley Fool owns shares of and recommends Tucows and TUCOWS INC. The Motley Fool recommends CRH Medical.