Undoubtedly, Canadian markets have shown an epic recovery from the pandemic lows of last year. Broader markets are up approximately 55% since March 2020 and still look in great shape. Interestingly, some TSX stocks have stood notably strong and absolutely thrashed broader markets. Here are two of those names. Is there any steam left in these two or will the rally dry up soon? Let’s see.
goeasy
Consumer lender goeasy (TSX:GSY) saw a massive recovery since last year. It has been firing on all cylinders with handsome financial growth. GSY stock is currently trading at its all-time highs and is up more than 130% this year.
The $3.5 billion goeasy primarily lends to non-prime borrowers that Big Six Canadian banks do not cater to. Its lending segment offers various loan products ranging from $500 to $45,000 with repayment terms of nine months to 10 years.
Recently, goeasy saw steep growth in loan originations that drove its top-line growth. Importantly, it saw a notable improvement in loan repayment trends, as the world started moving towards the end of the pandemic. In addition, more improvement in the employment scenario will likely further drive its business, ultimately helping its bottom line.
The company has seen consistent operational and financial growth in the last two decades. Since 2001, GSY stock has returned almost 10,000%, beating peer TSX stocks by a wide margin.
Driven by the strong recovery recently, goeasy management increased earnings guidance for the next three years. The stock looks hugely undervalued at the moment, considering the bullish guidance through 2023. Thus, I expect a massive run-up in goeasy stock for the next 12 months, driven by expected higher demand amid economic recovery and strong earnings growth.
Nuvei
Canada’s top fintech stock Nuvei (TSX:NVEI) has been really unstoppable this year. Besides robust quarterly earnings growth, several accretive acquisitions fueled Nuvei’s performance this year. As a result, the stock has soared 130% this year, outperforming peer high-growth stocks.
This week, Nuvei announced an acquisition of a Latin payment solution provider Paymentez. Along with payment gateways, Paymentez supports high-growth verticals like online games and delivery platforms.
It gives connectivity to 11 Latin American countries that support 80 local payment methods. After Mazooma and Simplex, another important acquisition of Paymetez will drive Nuvei’s top-line growth.
Nuvei reported US$328 million in revenues in the first half of 2021. That’s a steep 85% growth year over year. Notably, it could continue superior top-line growth given the recent accretive acquisitions and robust contribution from e-commerce spending. During the same period, Nuvei posted earnings of US$67 million against a loss in the first half of 2020.
Nuvei stands tall from its fintech peers owing to its single integrated platform that helps merchants accept more forms of payments in more currencies and in more markets.
Importantly, NVEI stock is stretched from the valuation standpoint after such a steep rally. Tech stocks generally trade at a heavy valuation premium. However, Nuvei’s premium indicates a limited upside potential from its current levels.
