Growth companies will consistently grow their financials above the industry average and deliver higher returns. Meanwhile, many growth companies are trading at a significant discount from their recent highs amid the recent selloff. So, if you plan to add a few growth stocks to your portfolio, here are my three top bets.
Lightspeed Commerce
Yesterday, Lightspeed Commerce (TSX: LSPD)(NYSE: LSPD) reported a solid third-quarter performance, with its top line outperforming analysts’ expectations by over 6%. At the same time, its adjusted EPS remained in line with expectations. Year over year, the company’s revenue grew by 165% amid organic growth and contributions from its recent acquisition of Vend, NuORDER, and Ecwid. Its subscription revenue grew by 175%, supported by an expanding customer base and acquisitions. Its GTV increased by 124% year over year to $20.4 billion.
Meanwhile, Lightspeed Commerce’s adjusted EBITDA losses increased from $6.6 million to $7.1 million. However, as a percentage of total revenue, its EBITDA losses declined from 11.4% to 4.7%. After posting a solid performance, the company’s management raised its revenue guidance for fiscal 2022 to be in the range of $540-$544 million. The growth in e-commerce and increased adoption of the omnichannel selling model have created a multi-year growth potential for the company.
Despite its high-growth potential, Lightspeed Commerce currently trades at a 75% discount from its September highs. So, investors should utilize the steep correction to accumulate the stock to earn superior returns over the next three years.
Tilray
Despite the weakness in the cannabis sector, I have selected Tilray (TSX: TLRY)(NASDAQ: TLRY) to be my second pick. It had posted an impressive second-quarter performance last month. Supported by its expanded Cannabis 2.0 product offerings, strong distribution network, and strategic price adjustments, its revenue grew 20% year over year. Also, the company continued to report positive adjusted EBITDA for the 11th consecutive quarter, with its adjusted EBITDA coming at $13.8 million.
Meanwhile, Tilray’s growth prospects look healthy. After acquiring a significant market share in the German medical cannabis space, the company looks to utilize its EUGMP-certified production facilities and robust distribution network to increase its presence in the other parts of Europe. Additionally, the company expects to utilize its two strategic pillars, SweetWater and Manitoba Harvest, to expand its THC business in the U.S. upon legalization. So, its outlook looks healthy.
Although Tilray could be volatile in the near term, I expect it to deliver superior returns over the next three years, given its growth potential and discounted stock price.
Canadian National Resources
After delivering impressive returns of 82% last year, Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ) has continued its uptrend returning 25.2% for this year. Despite the surge, the company still trades at an attractive forward price-to-earnings multiple of 9.2, providing an excellent buying opportunity. Oil prices have crossed $85/barrel amid OPEC+ countries struggling to increase their production and rising geopolitical tensions. Meanwhile, analysts expect the upward momentum in oil prices to continue this year.
Higher oil prices could boost the profitability of oil-producing companies, such as Canadian Natural Resources. Meanwhile, the company is investing around $3.6 billion to strengthen its production capabilities, which could increase its upstream production by close to 5%. With its debt falling to $14 billion, its management expects to utilize 50% of its 2022 cash flows for share repurchases, thus boosting investors’ returns. Further, the company had increased its quarterly dividend by 25% in November to $0.5875/share. Its forward yield currently stands at 3.51%. So, given the favourable business environment, Canadian Natural Resources could be an excellent addition to your portfolio.
