The S&P/TSX Composite Index has started hot in 2020, surging to record highs, even in the face of slashed growth projections for the broader economy. Surveys at the beginning of the 2010s showed that young investors perceived the stock market with skepticism. This came as no surprise, as they lived through the worst financial crisis since the Great Depression.
Those in the millennial generation and some in Generation Z who are eligible to invest right now have been treated to one of the longest bull markets in history. Markets are still benefitting from accommodating monetary policy across the developed world, and there is little sign of this letting up, even as economic growth has improved.
Valuations are high right now, and no one wants to catch the tail end of a bull market just to get burned. Today, I want to look at two stocks that are well positioned to post good growth in the 2020s. These are the kind of stocks that young investors should be targeting as this decade gets underway.
I have been a big proponent of Stars Group (TSX:TSGI)(NASDAQ:TSG) over the past several years. When the U.S. Supreme Court struck down a federal ban on sports betting in May 2018, I grew even more bullish on this stock. In late 2019, I’d discussed why I was still very optimistic about the stock heading into the 2020s.
Shares of Stars Group have dropped 4.6% over the past month as of close on February 13. The stock is still trading close to its 52-week high, but I like this as a buy-the-dip opportunity. Morgan Stanley projects that the sports betting market will be worth $8 billion in the United States by the year 2025. Companies that are already established with terrific online infrastructure, like Stars Group, are in a great position to take advantage of this growing market.
Stars Group is set to release its fourth-quarter and full-year results for 2019 on February 27. In the year-to-date period at the end of Q3 2019, Stars Group posted revenue growth of 33.7% and adjusted EBITDA growth of 24.1%. This is a growth stock to stash for the long term.
goeasy (TSX:GSY) has been a remarkable success story over the course of the last decade. Back in 2018, I’d discussed how a new environment for consumers had led to the rise of companies like goeasy. Canadian debt-to-income ratios have only increased since then, and more citizens are being forced to look at alternatives for credit.
This company offers high-interest loans to subprime borrowers through its easyfinancial segment and furniture and other durable goods on a rent-to-own basis through easyhome. goeasy released its fourth-quarter and full-year results for 2019 on February 12. It achieved total same-store revenue growth of 19.7% in the quarter. goeasy was also added to the S&P/TSX Canadian Dividend Aristocrats Index.
It is forecasting total revenue growth between 14% and 16% in fiscal 2020, which will slow to between 12% and 14% in FY 2021. By fiscal 2022, goeasy projects that its gross consumer loan receivable portfolio will hit between $1.8 billion and $2 billion at year end.
Though it is trading close to an all-time high, goeasy still boasts a favourable P/E ratio of 15 but a high P/B value of 3.2. The stock last paid out a quarterly dividend of $0.31 per share, which represents a modest 1.6% yield.
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
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 Ambrose O'Callaghan has no position in any of the stocks mentioned.