The Canadian stock market bounced back strongly from the pandemic-led selloff, reflecting widespread vaccine distribution, the uptick in consumer demand, and steady economic improvement. Despite the bull run, there are plenty of stocks still trading cheap and are well within most investors’ reach.
We’ll focus on three such very cheap (under-$10) Canadian stocks with ample growth catalysts that could deliver stellar returns in the long term.
A tech-based healthcare company
WELL Health Technologies (TSX:WELL) is my top pick for investors looking for solid growth at an attractive price of under $10. It delivered impressive returns in the past and appreciated over 208% in one year and over 2,057% in three years, thanks to its robust top-line growth and its ability to acquire and integrate high-growth businesses.
During the most recent quarter, WELL Health’s top line soared 150%, reflecting benefits from acquisitions and growth in its telehealth program. Further, it posted a positive adjusted EBITDA, which is encouraging.
I believe WELL Health’s revenues could continue to grow at a breakneck pace owing to the continued momentum in software and services revenues. Furthermore, WELL Health’s robust acquisition pipeline will likely strengthen its revenues and boost its overall cash flows. In addition, the growing demand for its offerings, digitization of clinical assets, higher market share, and focus on cost-control initiatives could provide a strong underpinning for growth and lift its stock higher.
A storage company
Like WELL Health, StorageVault Canada (TSXV:SVI) stock has appreciated significantly in value on the back of its solid revenue growth and strategic acquisitions. Notably, the stock has gained over 95% in three years and 555% in five years. I expect the momentum in its business to sustain, driven by continued growth opportunities in its storage business.
StorageVault is one of the fastest-growing storage companies and owns over 200 operating store locations across Canada, which is encouraging. With its dominant positioning and barriers to entry, the company remains on track to deliver solid future growth. I believe that the company’s rentable space could continue to rise on the back of acquisitions, thereby supporting its top line. Moreover, higher occupancy, improved operational efficiency, and substantial funds from operations support my bullish view. StorageVault stock is trading very cheap (under $10), making it a solid buy at current levels.
A cannabis stock
Investors could also consider buying Hexo (TSX:HEXO)(NYSE:HEXO) at current levels. Though it reported dismal third-quarter results, I believe its acquisition story looks appealing and is likely to drive its financials in the coming years.
Its recent acquisition of Redecan would make it the largest licensed producer in the recreational cannabis market in Canada and would provide a platform for global growth. I expect the company’s solid acquisition portfolio will likely generate cost synergies and drive future cash flows.
Besides acquisitions, Hexo is also focusing on expanding its footprint in the lucrative U.S. market to strengthen its market share. Overall, I see solid upside potential in the stock and believe that the company has bright long-term prospects due to the higher acceptance among consumers and increased medical industry usage.
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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends HEXO Corp.