Top 2 Growth Stocks for 2022

Growth stocks like Dye & Durham (TSXV:DND) are beaten down right now.

| More on:
Money growing in soil , Business success concept.

Image source: Getty Images

Growth stocks have reached a tipping point. Most high-growth companies have forecasted strong demand and steady expansion in 2022. However, their valuations have dipped in recent months. That presents an opportunity for investors. 

Here are the top two growth stocks to have on your radar in 2022. 

Growth stock #1

HIVE Blockchain (TSXV:HIVE)(NASDAQ:HVBT) wouldn’t have made it to anyone’s list for cheap stocks last year. The company’s market value was so astronomical that even triple-digit growth didn’t justify it. 

Fortunately, times have changed, and investors aren’t as excited about crypto as they used to be. HIVE stock has lost roughly 48% of its value since February. It is now trading at a price-to-earnings ratio of 10! As long as Bitcoin and Ethereum remain elevated, HIVE should experience significant margins and strong book value. 

In 2022, the company is set to expand mining operations, which should boost revenue significantly. The team also says they no longer need to sell their digital assets to fund growth since they have access to capital in the equity market. A combination of these factors should make HIVE an excellent growth stock for the new year.

Growth stock #2

Dye & Durham (TSX:DND) is another growth stock that deserves a mention. The stock had a 23% rally to all-time highs at the start of the year. Since then, it has been flat for the better part of the year compared to 20% gains registered by the TSX Index.

Nonetheless, the underperformance does not paint an accurate picture of the company’s long-term prospects. Dye & Durham is becoming a key player in the provision of cloud-based software and technology solutions to legal and business professionals. Its client base also includes large financial service institutions and government agencies.

The company delivered better-than-expected Fiscal Q1 2022 results. Revenue and adjusted EBITDA grew 414% and 398%, respectively, with net income landing at $22.1 million. The solid results underscore the scale and pace of Dye & Durham underlying growth.

Acquisition drive

Looking into the future, Dye & Durham is set to complete the acquisition of Telus’s financial solutions. While the acquisition is expected to cost the company $500 million, it should go a long way in strengthening its digital infrastructure

The company has also inked a deal to acquire Link Group, a technology-driven market leader that connects people with their assets for $3.2 billion. The acquisition affirms the company’s ambition to achieve $1 billion in adjusted EBITDA.

Valuation

A strong diversified customer base backed by a high retention rate and geographical expansion affirms Dye & Durham’s long-term prospects. While the stock has barely moved in 2021, the consolidation phase provides an ideal entry point.

The stock is trading at a premium with a price-to-earnings multiple of 116. However, if it can sustain its current pace of growth, this valuation is certainly justified. 

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 Vishesh Raisinghani owns Bitcoin and Ethereum. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool recommends TELUS CORPORATION.

More on Investing

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

edit Sale sign, value, discount
Stocks for Beginners

These 3 Growth Stocks Are on Sale and Set to Surge

Some growth stocks are on sale right now that offer massive long-term potential for investors. Here's a trio to consider…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Why Canopy Growth Stock Could Double in 2024

Canopy Growth (TSX:WEED) stock saw its share more than double in the last two weeks. So, can it do it…

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »