For months, high-growth stocks have been some of the best investments to make. But with the market on the verge of a recovery, if you’re looking to buy top Canadian growth stocks while they’re undervalued, now is the time to do so.
As inflation has continued to increase, and central banks in North America are increasing interest rates, investors have shifted their focus to finding stocks with solid operations and excellent cash flow.
This has left many growth stocks, especially tech stocks, cheap, as they’ve continued to sell off while investors focus on safer, more resilient investments.
However, over the past few weeks, we’ve seen these stocks start to perform well on the days when market sentiment is bullish. Many of the high-growth and top tech stocks are on the verge of a rally as they come back into favour.
And while this economic environment will likely persist for some time, investors recognize the unbelievable deals they can get investing in these high-growth stocks. So, with investors starting to digest the effects that higher interest rates will have on the economy, and with many of these stocks trading ultra-cheap, they are some of the best Canadian stocks to buy now before the market recovers.
Although there could be more short-term blips caused by negative developments in Ukraine, for now, we’re starting to see growth stocks gain momentum again. Therefore, you’ll want to buy these companies sooner than later.
And while there are several high-quality stocks to consider, here is one of the best Canadian stocks to buy now.
A top Canadian tech stock to buy now
Many growth stocks have been sold off in recent months, but tech stocks were some of the hardest hit. So, while now is the opportunity to buy top Canadian growth stocks, these top tech stocks are some of the first companies to consider.
There are plenty of high-quality tech stocks trading at attractive valuations today. However, one of the cheapest stocks today that’s offering very little downside risk and massive upside potential is AcuityAds Holdings (TSX:AT)(NASDAQ:ATY).
AcuityAds is an AdTech stock that has tonnes of growth potential — a big main reason it’s one of the best Canadian stocks to buy now.
Roughly a year and a half ago, it launched a new proprietary self-serve platform to help advertisers better control and analyze their marketing campaigns. And while the platform still has a tonne of long-term potential, sales for AcuityAds have been slower than expected.
This has caused the stock to underperform quite severely, and, coupled with the investing environment, AcuityAds has been one of the worst-performing stocks over the last 12 months.
However, it’s now so cheap that the valuation doesn’t make much sense. Right now, AcuityAds may have a market cap of roughly $215 million and a price to earnings of 18.7 times, but because it has so much cash on its balance sheet, its enterprise value (EV) — a better measure of a company’s total value — is just $125 million.
And at an EV of roughly $125 million, AcuityAds has a forward EV-to-EBITDA ratio of just 5.8 times. That’s cheap for any company, let alone a high-potential tech stock. So, AcuityAds is clearly one of the cheapest Canadian stocks to buy now.
Bottom line
Although its performance hasn’t been spectacular lately, AcuityAds stock now trades so cheaply that there is very little downside risk left. And for investors who can display some patience, once AcuityAds can start to grow its sales, it has a tonne of potential to see its share price rally.
So, before the market fully recovers, and these stocks start to rally, AcuityAds is certainly one of the best Canadian stocks to buy now.
