Growth Investors: 2 Stocks Are Great Value Buys Right Now

Growth investors have excellent buying opportunities in two industry leaders with visible organic growth potential.

| More on:
Woman has an idea

Image source: Getty Images

Growth investors should include Spin Master Corp. (TSX:TOY) and Park Lawn Corporation (TSX:PLC) in their watchlists. The stocks were among the solid performers last year amid a challenging environment. Furthermore, the respective businesses are well-positioned for organic growth in the quarters or years ahead.

High-flyer in 2021

Spin Master was a revelation in 2021, with its total return of 65.25%. The diverse portfolio of entertainment franchises, digital games, and innovative toys are plus factors for the dominant player in the toy industry. Its current price of $43.70 is 8.84% lower than year-end 2021, although market analysts forecast a return potential of at least 25.58% in 12 months.

In Q3 2021 (quarter ended September 30, 2021), the $4.45 billion global children’s company delivered very strong financial and operating results. Spin Master’s CFO, Mark Segal, said, “Our Gross Product Sales and Total Revenue were higher than in any quarter in our history.”

Segal adds, “The combination of strong sales, diligent cost management, and our continued efforts to refine our operational capability led to record profitability levels.” Management reported 25%, 93.5%, and 158% increases in total revenue, entertainment & licensing revenue, and digital games revenue versus Q3 2020.

In October 2021, Spin Master launched a $100 million corporate venture fund. Its Chairman of the Board, Ronnen Harary, said, “Spin Master Ventures (SMV) will establish us as the partner of choice for entrepreneurs looking for capital to start and grow a business in the kids’ space.” Harary adds the fund complements Spin Master’s acquisition strategy and should bolster the product development pipeline. 

The investment thesis for Spin Master is simple. It will invest in cutting-edge ventures that will shape the future of play in the ever-changing children’s entertainment space. SMV will invest and capitalize on medium and long-term trends, including emerging technologies, pioneering services, and other areas that can strengthen Spin Master’s offerings.

High-growth operator

Like Spin Master, Park Lawn was a winning investment last year (+50.53% total return). This Toronto-based company aims to be the premier funeral, cremation, and cemetery provider in North America. Since 2011, management hasn’t stopped embarking on growth, expansion, and strategic positioning in the market. The current share price is $39.16, while the dividend yield is a modest 1.15%.

Performance-wise, Park Lawn’s total return in 10 years is a respectable 624.08% (21.79% CAGR). Market analysts recommend a buy rating and forecast a return potential between 18.57% and 27.68% in one year.

The $1.34 billion progressive, growth-orientated company delivers high-quality products and services to meet the rapidly evolving needs of the market. In North America’s death care industry, Park Lawn generates $22 billion in revenue ($18 billion and $4 billion from funeral homes and cemeteries).

Park Lawn is essentially a high-growth operator in a stable but highly fragmented industry. According to management, the company is uniquely positioned to take advantage of population demographics, particularly the aging of Baby Boomers or people born between 1946 and 1964.

Visible organic growth

Spin Master and Park Lawn are great buys for growth and value investors. Organic growth in 2022 and beyond is almost in the bag.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns and recommends Spin Master Corp.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »