Millennials who didn’t join the meme craze shouldn’t fret over the lost money-making opportunity. It was a joyride but a risky one because Reddit investors picked up shares of distressed companies. However, you’re in luck if you’re chasing after oversized returns.
The TSX has a lineup of high-growth stocks. Some of the top picks won’t even dent your budget. Fire & Flower (TSX:FAF) and Payfare (TSX:PAY) are the best bang for your buck in October 2021. Their return potentials are between 50% and 90% but could be more given the business models and strong fundamentals.
Don’t underestimate Fire & Flower because it’s a small-cap stock in the cannabis space. The $292.32 million company is a better buy than its bigger industry peers. Market analysts forecast the price to climb by as much as 92.65%, from $0.85 to $1.64%. They’re not as bullish on underperformers like Canopy Growth, Aurora Cannabis, and Tilray.
Look beyond Fire & Flower and check out its strategic partner. Alimentation Couche-Tard, the leading operator of convenience stores globally, owns 22.4% of the multi-banner cannabis retail operator. The ownership could rise to 50.1% for a controlling stake.
Couche-Tard made a strategic investment in June 2019 because the $292.32 million company is one of the fastest-growing cannabis pure-play retailers. The entry of Couche-Tard enables Fire & Flower to pursue its growth initiatives aggressively. It also hopes to recognize the full value of its Hifyre digital retail platform.
In Q2 fiscal 2021 (quarter ended July 31, 2021), total revenue grew 51% to $43.3 million versus Q2 fiscal 2020. Fire & Flower reported a $19.4 million net income compared to the $29 million net loss in the same period last year. According to its CEO Trevor Fencott, it was the fifth consecutive quarter of positive EBITDA.
Fencott said the impressive financial results demonstrate the significant growth of Fire & Flower’s Hifyre business segment. Management’s primary focus is to drive additional high-margin revenue streams. Fencott adds that Fire & Flower’s e-commerce model will cement its leadership position in the global cannabis retail industry.
Focus on the gig economy
Payfare debuted on the TSX on March 19, 2021. As of October 8, 2021, the fintech stock trades at $9.92 per share. The gain from its closing price of $6 on the first trading day is 65%. Had you invested $15,000 then, your money would be worth $24,800 today.
Market analysts recommend a strong buy rating and have a 12-month average price target of $15.25 (+54%). Fintech stocks like Payfare are popular with younger investors. This $451.45 million financial technology company caters to the gig economy (workers and platforms).
Gig workers employed by gig platforms can enroll in Payfare’s digital banking app free and get a payment card. Cardholders can pay bills, transfer funds, make ATM withdrawals, shop in-store or online, and save too. Payfare’s trusted partners on the gig platform side include Lyft, DoorDash, Uber, and Uber Eats. Many workers join the platform because payouts are faster, if not instant.
Fire & Flower and Payfare are attractive investments for millennials or younger investors. Apart from the affordable share prices, the businesses are easy to understand. Because of the massive growth potentials, expect oversized earnings or returns in due time.