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
- having them in your portfolio can help your outperform during bad times, when 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 this week is Saputo (TSX:SAP), which has delivered operating cash flow and revenue growth of 26% and 36%, respectively, over the past five years. Shares of the dairy giant are flat over the past year.
Saputo continues to lean on its massive scale (about 11 billion litres of milk processed per year), geographic reach (sells in over 50 countries), and leadership position to deliver solid growth for shareholders. In Saputo’s Q3 results last week, adjusted earnings improved to $204 million as revenue increased 8.8% to $3.9 billion.
“Despite challenges facing the industry our team remained agile proactively managing headwinds,” said CEO Lino Saputo. “Consolidated revenues increased by 8.8% related to the contribution of recent acquisitions, higher international selling prices of cheese and dairy ingredients and active pricing initiatives to mitigate costs.”
Saputo shares trade at a forward price-to-earnings ratio of 20 and offer a dividend yield of 1.7%.
Next up, we have Canada Goose Holdings (TSX:GOOS)(NYSE:GOOS), which has grown its EPS and revenue at a rate of 766% and 411%, respectively, over the past five years. Shares of the winter jacket specialist are off nearly 50% over the past year.
China concerns continue to weigh heavily on the stock. Just yesterday, the stock fell sharply after Canada Goose warned that the coronavirus is having a significant impact on results. Looking ahead, management now sees full-year revenue growth of 13.8%–15%, well below its prior view of plus-20% growth.
“From the frequent lines outside our stores to the response to new experiential innovations, consumer engagement was consistently strong across all geographies during peak season,” said CEO Dani Reiss. “While we recognize that we are now navigating a period of heightened uncertainty due to the coronavirus health crisis, we remain confident in our strategy and long-term potential.”
Canada Goose currently has a forward P/E of 25.
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 now up 77% over the past year.
Goeasy’s leading position in the Canadian subprime space, impressive scale, and strong secular growth trends continue to fuel blowout results. In the company’s Q4 results earlier this week, adjusted EPS jumped 42% as revenue increased 20% to $166 million.
More importantly, goeasy’s loan portfolio grew to a whopping $1.1 billion while management also increased the dividend by 45%.
“The fourth quarter wrapped up another record year for the Company and was highlighted by strong loan growth, stable credit performance, and further improvements to our balance sheet and liquidity,” said CEO Jason Mullins. “With brand awareness at an all-time high of 85%, we experienced record levels of consumer demand.”
Goeasy shares trade at a forward P/E of 11.
The bottom line
There you have it, Fools: three attractive growth stocks to check out.
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.
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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 Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of and recommends Canada Goose Holdings. The Motley Fool recommends SAPUTO INC.