Up Over 100% in the Last 2 Years: Will the Momentum in These 3 Canadian Stocks Continue?

Despite delivering over 100% of returns in the last two years, I believe the rally in these three Canadian stocks is not over.

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Upwards momentum

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The S&P/TSX Composite Index has increased by over 26% in the last two years. The expectation of improving corporate earnings and the optimism over the reopening of the economy has driven the index higher. Meanwhile, the following three Canadian stocks have outperformed the broader equity markets by more than doubling their stock price during the same period. So, let’s examine whether or not the uptrend in these stocks could continue.

goeasy

First on my list is goeasy (TSX:GSY), which has returned close to 210% in the last two years. Despite the pandemic’s impact, the company had delivered a solid performance, which has boosted its stock price. Despite the strong growth, the company has just acquired 3% of its addressable market, thus allowing it a significant scope for expansion.

Meanwhile, goeasy acquired Handicare in April this year, which has added new business verticals and strengthened its competitive positioning in a few key markets. The company focuses on enhancing the customer experience, strengthening its digital channels, introducing new products, and venturing into new markets to drive growth. The company’s management projects its loan portfolio to grow by above 50% over the next two years to reach $3 billion by the end of 2023.

Meanwhile, despite the surge in its stock price, goeasy still trades at a forward price-to-earnings multiple of 16.6. So, given its healthy growth prospects and attractive valuation, I expect the rally to continue.

Docebo

Over the last 24 months, Docebo (TSX:DCBO)(NASDAQ:DCBO) has delivered impressive returns of 465%. Amid the pandemic-infused restrictions, the demand for e-learning management systems rose, benefiting the company. However, I expect the demand for e-learning management systems to sustain, even in the post-pandemic world, given their convenience and cost effectiveness. The company’s management projects the e-learning management software market to grow at a CAGR of 21% in the next four years to reach US$30 billion by 2025.

Amid the expanding addressable market, Docebo focuses on launching innovative products, upselling to increase its average revenue per customer, and expanding its geographical presence to drive growth. The company earns around 93% of its revenue from recurring sources, which is encouraging. Amid the recent selloff in high-growth stocks, Docebo is trading over 23% lower than its September highs. So, given its healthy outlook, I believe the correction offers an excellent entry point for investors with over two years of investment timeframe.

Lightspeed Commerce

Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) has witnessed a significant selling in the last two months, with its stock correcting over 55% from its September highs. The weak forward guidance and a bearish report from Spruce Point Capital Management, which had accused the company of fudging its numbers before going public, appear to have made investors nervous.

Despite the steep correction, Lightspeed Commerce has delivered above 140% returns in the last two years. The increased adoption of the omnichannel selling model, innovative product launches, geographical expansion, and strategic acquisitions have driven its financials and stock price. In the recently reported second-quarter earnings, which ended on September 30, the company’s top line grew by 193% to US$133.2 million, with its gross transaction value and customer locations increasing to US$18.8 billion and 156,000, respectively.

After reporting its second-quarter earnings, Lightspeed’s management issued weak guidance for this fiscal, citing supply chain issues. Despite these near-term challenges, the company’s long-term growth prospects look healthy. So, I believe investors with over three years of investment time frame could accumulate the stocks to earn superior returns.

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 recommends Docebo Inc. and Lightspeed POS Inc. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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