Canadian stocks have been enjoying a nice run-up in 2021. Investor sentiment has once again returned to Canada’s much-loved value (financials and industrials) and cyclical stocks (lumber, energy, and base metals). Yet, oddly enough, a number of great quality Canadian growth stocks have failed to enjoy the rally. To me, this temporary dislocation looks like an intriguing opportunity to buy up some long-term-growth businesses.
A Canadian point-of-sales stock
Lightspeed POS (TSX:LSPD)(NYSE:LSPD) is certainly not a cheap growth stock by any means. It trades with a price-to-sales multiple of 60 times! It is not yet earnings positive either. Rather, it is focusing on growing geographic reach and capturing market share. Consequently, investors can expect a certain level of volatility with this Canadian stock. Keep in mind, that this stock has a higher level of risk, but also a higher level of reward (kind of like Shopify).
Yet this business is growing very rapidly across the globe. It has been growing revenues by +30% for the past four years. Its omni-channel point-of-sales software has actually proved a lifesaver for many merchants during the pandemic. Consequently, Lightspeed’s business performed with resilience in 2020. The company just dipped after acquiring Vend, so today could be an attractive long-term entry point.
A Canadian healthcare stock leading in the United States
VieMed Healthcare (TSX:VMD)(NASDAQ:VMD) is perhaps lesser known, largely because 100% of its business operates in the United States. It is a leading provider of respiratory therapies and ventilator services across America. After the pandemic, many healthcare providers are looking to outsource non-essential therapies from hospitals to people’s homes. VieMed fits into this trend perfectly.
VieMed has a large addressable market of patients that require its services. It has completed numerous studies that confirm its in-home care provides patients better health outcomes and also save healthcare providers a lot of money. It’s a win-win!
Out of the pandemic, VieMed expects to return to organic growth of +30% per annum. The company has a great balance sheet, so it is also primed for an acquisition or two this year — not to mention, the stock is pretty cheap here.
A new tech IPO
Another intriguing Canadian growth stock is Telus International (TSX:TIXT)(NYSE:TIXT). Telus International received a lot of attention when it was spun out of Telus in February 2021. Yet the stock has largely declined since its initial public offering.
I think this presents a great opportunity for investors. Unlike Lightspeed, TIXT is a Canadian growth stock that is actually profitable. In 2020, it grew revenues, earnings per share, and EBITDA by 55%, 27%, and 74%, respectively.
This Canadian stock has very strong platform in digital customer experience. It just acquired a very unique data analytics and artificial intelligence business that should help differentiate its level of services. Many large tech businesses are now outsourcing their customer service platforms, so I think TIXT still has a large growth opportunity ahead.
A global unified communications provider
Sangoma Technologies (TSXV:STC) is a great way to play the work-from-home trend and the-return-to-work recovery. It provided unified communications solutions that enable small- to mid size businesses to operate communications systems remotely and in-office. It provides an all-in-one solutions platform helps smaller businesses avoid cumbersome contracts with multiple communications providers.
Sangoma just acquired a very complementary business (Star2Star) that will provide it broader solutions and geographic diversification. Consequently, the combined entity will have a size and scale to compete very strategically across the world.
Pre-acquisition, this Canadian stock was growing revenues by a CAGR of over 50% since 2016. Post-acquisition, I believe the opportunities for synergies, cross-selling, and innovation could accelerate growth further. This stock looks really attractive for a long-term buy today.
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 Robin Brown owns shares of Lightspeed POS Inc, Sangoma Technologies, TELUS CORPORATION, TELUS International (Cda) Inc., and Viemed Healthcare Inc. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify, Shopify, and Viemed Healthcare Inc. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends TELUS CORPORATION.