The S&P/TSX Composite Index has continued its upward momentum by posting a new all-time high yesterday. Higher oil prices and hopes of fiscal stimulus increased investors’ confidence, driving the equity markets higher. Meanwhile, growth stocks tend to deliver superior returns during economic expansion. So, here are four high-growth TSX stocks that can deliver superior returns this year.
Despite its recent pullback, BlackBerry (TSX:BB)(NYSE:BB) is one of the best performers this year, with its stock price rising 83.5%. Meanwhile, the upward momentum in its stock price could continue amid its high-growth prospects and attractive valuation. The company earns around 90% of its revenue from recurring sources, such as subscriptions, licences, and support payments, which is encouraging.
Meanwhile, its recent collaboration with Amazon Web Services and the expansion of its three-year-old partnership with Baidu offer significant growth potential in the connected vehicle services segment. Additionally, Spark Suite and Cyber Suite platforms have strengthened BlackBerry’s position in the cybersecurity and endpoint management market. Despite its impressive growth prospects, the company trades at a forward price-to-sales multiple of 4.8, providing an excellent buying opportunity.
My second pick is a ride-hailing company, Facedrive (TSXV:FD), which has returned over 195% this year. Its aggressive expansion and favourable market conditions drove the company’s stock price. Amid the pandemic, the demand for food-delivery services has increased. To capture the increasing demand, the company has expanded its food-delivery service to 19 cities across Canada. Implementing health and safety features on its platforms and its environmentally friendly approach appears to have gained traction with its customers. It has approximately 250,000 active users on its platform.
Further, the company had recently launched Steer, a fast-growing electric vehicle (EV) subscription-service-provider platform in Toronto. This service could complement the company’s existing TaaS service. Further, the company’s other verticals, such as e-commerce and healthcare segments, are also expanding. So, the company’s growth prospects look healthy.
Amid the increased interest in cannabis stocks and its strong second-quarter performance, Aphria (TSX:APHA)(NASDAQ:APHA) is trading 212.5% higher for this year. Meanwhile, the rally in its stock price could continue, given the expanding addressable market and its growth initiatives and proposed merger with Tilray.
In November, five more U.S. states had legalized cannabis. Meanwhile, many other states could legalize cannabis amid budget deficits created from the increased spending due to COVID-19. So, the United States cannabis market offers immense growth potential.
Further, the company’s proposed merger with Tilray could strengthen the combined entity’s position in Canada, the United States, and the international cannabis markets. The synergy between the two companies could also save $100 million in the first two years of closing the deal. Aphria’s management hopes to close the deal by late April or early May.
The interest in EVs has increased amid the rising pollution levels, driving the demand for electric powertrain components. Meanwhile, MarketsandMarkets expects the global electric powertrain market to reach US$191.4 billion by 2027, representing a CAGR of 14.9%.
This shift toward EVs could benefit Magna International (TSX:MG)(NYSE:MGA). The third-largest auto component manufacturer in the world is looking at acquiring a significant market share in the growing EV market. In December, the company announced a joint venture with LG Electronics, which will produce e-motors, inverters, and onboard chargers used in EVs. Further, the company could also benefit from the entry of tech giants, such as Apple and Alphabet, into the EV space.
Despite its high growth prospects, Magna International trades at an attractive valuation, with its forward price-to-earnings and forward price-to-sales multiple standing at 9.1 and 0.4, respectively.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Baidu. Tom Gardner owns shares of Alphabet (A shares), Alphabet (C shares), and Baidu. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Baidu. The Motley Fool recommends BlackBerry, BlackBerry, and Magna Int’l and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.