Growth stocks have been under pressure over the past few months due to multiple rate hikes, expectations that growth will slow down, and concerns over their high valuation. However, the steep correction has dragged some growth stocks into oversold territory, providing excellent buying opportunities for long-term investors. Given their high-growth prospects and cheaper valuations, I expect these three stocks to double your investments over the next three years.
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goeasy
goeasy (TSX:GSY), which offers lending and leasing services to sub-prime customers, has lost over 50% of its stock value amid the recent selloff. The steep correction has dragged its price-to-earnings (P/E) multiple for the next 12 months down to 8.3, lower than its historical average. Meanwhile, the company continues to grow its financials at a healthier rate. Its revenue increased 36.4% in the March-ending quarter, while its adjusted EPS grew by 16.2%.
Given the economic expansion, loan originations could rise in the coming quarters. To meet growing demand, the company focuses on new product launches, enhancing customer experience, strengthening its digital channels, and expanding geographically. Also, the acquisition of LendCare has added new business verticals and provided cross-selling opportunities. So, the company’s growth prospects look healthy.
Meanwhile, goeasy’s management has set optimistic guidance, with its loan portfolio projected to grow 67% to reach $3.6 billion by 2024. Management also expects to deliver a return on equity (ROE) of over 22% annually for the next three years. The company rewards its shareholders by consistently raising its dividends at a healthy rate. So, considering its growth prospects and discounted stock price, I expect goeasy to double your investment over the next three years.
TransAlta Renewables
Falling prices and growing consciousness have accelerated the adoption of renewable or clean energy. The International Energy Agency has projected that global renewable electric capacity will reach 4,800 gigawatts by 2026, representing an increase of 60% from its 2020 levels. Given the favourable market, my second pick is TransAlta Renewables (TSX:RNW), which operates a portfolio of renewable and non-renewable power-producing facilities.
Meanwhile, the company is expanding its production capacity through organic growth and acquisition. In the first quarter, it added 428 megawatts of power-production capacity. Plus, its project pipeline looks promising, with over two gigawatts of projects in the evaluation stage. Also, the company’s long-term power-purchase agreements provide stability to its financials. So, its growth prospects look healthy.
TransAlta Renewables pays a monthly dividend of $0.07833, with its forward yield at an impressive 5.34%. Despite its healthy growth prospects and high dividend yield, the company’s P/E multiple for the next 12 months stands at an attractive 21.8. So, I am bullish on TransAlta Renewables.
Nuvei
Nuvei (TSX:NVEI)(NASDAQ:NVEI) is another stock that’s witnessed a substantial selloff over the last few months. Amid weakness in the tech sector, the payment technology company has lost over 75% of its stock value compared to its recent highs. Amid the steep correction, the company trades at an attractive valuation, with its P/E ratio for the next 12 months at a juicy 14.2.
Meanwhile, Nuvei continues to deliver solid performance, with its revenue and adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) growing at 43% and 40%, respectively, in the first quarter. Despite the challenging environment, Nuvei has reaffirmed its 2022 guidance. The company expects its revenue to be in the range of $940 – $980 million, representing year-over-year growth of more than 30%. Top-line growth could also boost its EBITDA, which could grow by over 28%.
With expected revenue growth of over 30% annually in the near-term, the company’s EBITDA margin could eventually increase to 50% in the long-term. So, given its growth prospects, I believe Nuvei is an excellent buy at these levels.
