The recent pullback in growth stocks trading on the TSX is creating excellent opportunities for value investors seeking long-term growth. Today I will discuss three growth stocks that could be a bargain, despite some of them having high valuations. Adding these stocks could help you capitalize on the underlying companies’ massive upside potential.
Lightspeed POS (TSX:LSPD)(NYSE:LSPD) has been one of the best-performing stocks in the last two years. The high-growth tech stock launched on the TSX in March 2019, and it has soared. The stock is trading for $85.70 per share, boasting a 353% increase in its valuation in just two years.
While the stock has been a fantastic growth story on the TSX, but it’s priced too high right now. Its high valuation could be a reason for Lightspeed’s recent volatility. As long as it does not reach a more favourable price-to-sales ratio, the volatility will likely remain. The volatility might be worth it for many investors due to its impressive growth potential.
Now could be an ideal time to establish a position in this growth stock.
Dye & Durham
Dye & Durham (TSX:DND) is a company that only recently became public, but it could be trading at a discount compared to its upside potential.
Since its launch on July 17, 2020, the stock has appreciated by over 180%. The stock’s rapid growth has slowed down in recent months. It is down by just over 20% from its highest valuation in February 2021.
While Lightspeed may have more growth potential than DND, the company’s shares are not as expensive as Lightspeed. DND offers cloud-based software to help its clients organize their records. Its tech solutions are in high demand from government, financial, and legal entities. It has huge upside potential.
goeasy (TSX:GSY) is the only stock among the three that is not trading for a discount right now. Its valuation is near its all-time high, and its shares have been climbing consistently since March 20, 2020. Unlike Lightspeed and DND, goeasy is not priced as high as a growth stock, but it has been performing like one.
Its valuation is up by almost 730% in the last five years. Its growth in the last decade has been fantastic. Despite such a stellar growth, it boasts only a $2.36 billion market capitalization. While I will not likely expect it to exhibit the same performance over the next decade, its low market capitalization suggests there is still plenty of room for it to grow.
A consumer-focused financial services company, goeasy offers customers all types of loans. With pent-up consumer demand rising along with higher than usual savings, we could see a return to spending. goeasy could have substantial business coming its way in the post-pandemic economy.
Growth stocks cooled down after an outstanding year in 2020 despite all the challenges. Many Canadian investors have rotated out of high-priced tech stocks and move to value stocks. The recent pullback in the tech sector could be an ideal opportunity to load up on growth stocks with excellent long-term prospects.
Lightspeed POS, Dye & Durham, and goeasy could be excellent picks for investors seeking growth stocks with a long investing horizon.
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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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of Lightspeed POS Inc.