Top 3 Cheap Growth Stocks for 2022

Growth stocks like WELL Health Technologies (TSX:WELL) seem undervalued.

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Growth stocks were unbelievably expensive for much of the past two years. Investors overallocated to these companies as interest rates fell to 0%. Now, the game has changed and these stocks are finally dropping. 

Here are the top three growth stocks that are cheap based on fundamentals.

Cheap growth stock #1

WELL Health Technologies (TSX:WELL) was the darling of tech investors when the pandemic erupted. However, a correction in growth stocks coupled with the struggles of its American rival have pushed the stock lower this year. 

WELL Health stock is currently trading 23% below January levels and 55% below its all-time high set last year. However, the underlying business is as strong as ever. Revenue surged 395% in the first quarter of this year. The company also raised its annual guidance from $500 million to $525 million in sales. 

Based on that forecast, the stock is currently trading at a price-to-sales ratio of 1.6. Management has approved a normal course issuer bid to acquire and dispose of 2.5% of the company’s outstanding shares. That’s a clear signal that the stock is cheap and deserves more attention. 

Cheap growth stock #2

goeasy (TSX:GSY) is a tricky stock in this market. On one hand, the company is exposed to subprime borrowers who might have a tough road ahead as interest rates rise. On the other hand, the company has a robust track record and is relatively cheap. 

goeasy stock is down 35% year to date and 45% from all-time highs. However, the company has compounded earnings at an annual rate of 29% and a dividend at a rate of 23% over the past decade. It’s a growth stock with a proven track record and decent outlook. 

The stock trades at just 12 times earnings per share and offers a 3.2% dividend yield. Investors with an appetite for risk could add this to their high-growth watch list. 

Cheap growth stock #3

TFI International (TSX:TFII)(NYSE:TFII) is an interesting and underrated growth stock. The company manages one of the largest fleets of trucks across North America. This segment of the logistics industry faces a lack of supply as truckers retire and a surge in demand as the economy rebounds. Demand for trucking is a key reason for the supply chain crunch we’re facing right now. 

In other words, TFI is experiencing a growth spurt as the global economy recovers. 

In the last quarter of 2021, the company reported 6% growth in Package and Courier, 22% in Truckload services, 509% surge in goods “Less-Than-Truckload,” and 35% for Logistics. In other words, it had strong growth across all its business segments. 

This steady pace of growth isn’t reflected in the stock price. TFI stock trades at a P/E ratio of just 10.2. It’s an ideal target for investors seeking a low-risk growth opportunity. 

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 has positions in WELL Health Technologies Corp. The Motley Fool has no position in any of the stocks mentioned.

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