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.
So if you’re a Tax-Free Savings Account (TFSA) investor looking for outsized tax-free gains, this list is a good place to start.
Easy does it
Leading off our list is alternative lender goeasy (TSX:GSY), which has delivered EPS and revenue growth of 200% and 128%, respectively, over the past five years.
After plunging in March, goeasy shares have risen nicely in recent weeks, suggesting that the worst might be behind it. Specifically, goeasy’s leading position in the Canadian subprime space, strong scale, and powerful secular growth trends should continue to fuel long-term success.
In the company’s most recent results, EPS clocked in at $1.41 as revenue jumped 20% to $167 million. More importantly, goeasy’s loan portfolio grew 33% to a whopping $1.17 billion.
“We were fortunate to enter this crisis from a position of strength, with over $214 million of liquidity and a business model that is well positioned to navigate through an economic downturn,” said CEO Jason Mullins.
Goeasy shares currently trade at a forward P/E of 6 and offer an attractive dividend yield of 3.8%.
Next up, we have overnight cargo company Cargojet (TSX:CJT), which has grown its EPS and revenue at a rate of 66% and 58%, respectively, over the past five years.
Cargojet shares have held up quite well during the downturn, suggesting that Cargojet is not only an attractive growth play, but a solid defensive play to boot. Specifically, the company’s market-leading position coupled with overall e-commerce trends should continue to fuel strong returns over the long haul.
In the most recent quarter, in fact, adjusted EBITDA increased 24.5% as revenue increased 11% to $123 million. More importantly, free cash flow remained strong.
“While the longer-term implications, and the full impact of COVID-19 remains unknown, Cargojet is working hard and is well positioned to successfully support this new environment both in the short as well as in the long run,” said CEO Dr. Ajay Virmani.
Cargojet currently trades at a forward P/E of 54 at writing.
Bet your bottom dollar
Leading off our list is discount retailer Dollarama (TSX:DOL), which has grown its EPS and revenue at a rate of 111% and 543%, respectively, over the past five years.
Dollarama shares have also recovered nicely after getting smoked in March, providing Fools with some peace of mind. Specifically, shareholders can lean on the company’s solid scale (over 1,250 stores across Canada), well-recognized brand, and healthy fundamentals for strong long-term results.
In the most recent quarter, EPS clocked in at $0.57 as revenue increased slightly to $1.07 billion. More importantly, same-store sales — a key retail metric — improved 2%.
“In the current unprecedented situation, we cannot predict how shopping patterns will evolve, but as an essential business, we remain committed to maintaining well-stocked stores and the same compelling value proposition that has made Dollarama a household name and the weekly shopping destination for affordable everyday products for millions of Canadians,” said CEO Neil Rossy.
Dollarama currently trades at a forward P/E in the high teens.
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 CARGOJET INC.