Despite the concerns over rising inflation, the Canadian equity markets have continued their uptrend, with the S&P/TSX Composite Index touching a new all-time high on Thursday. The index currently trades 19.3% higher for this year. Higher oil prices and the expectation of expansionary monetary policies to drive demand have boosted the index. Amid investors’ optimism, here are three top mid-cap stocks you can buy right now to earn superior returns over the next two years.
Given its strong performance over the last two decades and excellent growth prospects, goeasy (TSX:GSY) could be a perfect addition to your portfolio. Since 2001, the company’s top-line and adjusted EPS have grown at a compound annual growth rate (CAGR) of 12.8% and 24.9%, respectively. Despite the strong growth, the company has just acquired 3% of its addressable market, loans under $50,000. So, the company’s growth potential looks robust.
Meanwhile, the acquisition of LendCare has added new business verticles while increasing its addressable market. Besides, goeasy focuses on widening its product offerings, expanding its distribution channels, and venturing into newer markets. It has also strengthened its liquidity position by raising around US$320 million through various debt facilities. Further, the improvement in economic activities amid the easing of restrictions could boost the demand for goeasy’s services in the coming quarters.
Despite a strong increase in its stock price, goeasy still trades at an attractive valuation, with its forward price-to-earnings standing at 17.1. Also, the company rewards its shareholders by raising its dividends consistently. Its dividends have increased at a CAGR of 34% in the last seven years, while its forward yield currently stands at 1.32%.
Despite its near-term volatility, BlackBerry (TSX:BB)(NYSE:BB) could deliver superior returns over the next two years, given its multiple growth drivers. Modern vehicles have numerous components produced by different manufacturers. So, these components produce data in various formats, creating challenges for software developers. Meanwhile, BlackBerry’s IVY platform hopes to solve these issues by standardizing data points. So, IVY could be a solid growth driver for the company.
Besides, BlackBerry is also looking to strengthen its position in the growing EV market and could also benefit from rising software components in the vehicles. Further, the company had recently launched BlackBerry Optics 3.0, BlackBerry Gateway, and BlackBerry Jarvis 2.0, strengthening its position in the end-point security markets. These initiatives could boost the company’s financials in the coming quarters.
My third pick would be Docebo (TSX:DCBO)(NASDAQ:DCBO), which provides learning management solutions to enterprises and their employees and customers. After delivering an impressive return of over 385% last year, the company has continued its upward momentum, with its stock price rising by 28%. Its strong performance in the first six months, with its top-line growing around 70%, has increased its stock price.
Meanwhile, given its growing customer base and rising average contract values, Docebo’s upward momentum could continue. It acquired many blue-chip clients in the last quarter, including Lululemon, RE/MAX, and TotalEnergies. Its customer base and average contract value had increased by 22.6% and 27%, respectively.
Further, the company earns around 92% of its total revenue from recurring sources, which is encouraging. Besides, many businesses are opting for digital tools to upskill their employees, given their cost-effectiveness and convenience. Thus, Docebo’s outlook looks healthy.
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.
The Motley Fool owns shares of and recommends Docebo Inc. The Motley Fool recommends BlackBerry. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.