The stock market selloff has made many high-growth stocks look undervalued in 2022. As the recovery in such growth stocks — especially in tech stocks — has gained steam in the last month, it might be the right time for investors to add some fundamentally strong growth stocks to their portfolio and hold them for the long term. In this article, I’ll highlight one of the best Canadian high-growth stocks investors can buy this week.
The top Canadian high-growth stock to buy this week
Before picking growth stocks to invest in, investors must pay attention to a company’s recent sales growth trends. While an established business might focus on ways to expand its profitability, it’s critical for a new growth company to focus on its top-line growth and market expansion instead. Considering these factors, I find the shares of Converge Technology Solutions (TSX:CTS) really attractive right now.
It’s a Toronto-based cloud-based software solutions provider with a market cap of about $1.3 billion at the moment, as its stock trades with around 43% year-to-date losses at $6.10 per share. It primarily focuses on providing clients with advanced analytics, cybersecurity, digital infrastructure, and digital workplace solutions. Based on its 2021 sales figures, the United States market accounted for nearly 72% of Converge Technology’s total revenue, while about 20% came from its home market.
Solid top-line growth and strong outlook
As the global pandemic-related restrictions give a big push to hybrid work culture, Converge Technology posted 38% YoY (year-over-year) revenue growth in 2020. Its sales growth accelerated further in the next year, as the demand for its workspace solutions continued to strengthen with more businesses shifting to digital commerce and remote work.
In 2021, the tech firm registered a solid 61% YoY growth in its total revenue to $1.53 billion. This sales growth also helped Converge post adjusted earnings of $0.10 per share for the year — far better compared to its adjusted net loss of four cents per share the previous year.
While most growth companies that saw a surge in demand for their services during the COVID period are struggling to maintain growth this year, Street analysts expect Converge Technology’s top-line growth continue accelerating. According to analysts’ latest estimates data, the company is likely to report 63.8% YoY growth in its revenue in the ongoing year to around $2.5 billion. More importantly, its net profit in 2022 is expected to be around $73.9 million, reflecting an outstanding 297% growth over the previous year.
Foolish bottom line
During its first-quarter (Q1) earnings conference call, Converge Technology’s management highlighted “an incredibly strong demand environment around digital transformation” for its solid financial growth trends.
Converge Technology is set to announce its Q2 quarterly results on Tuesday after the market closing bell. I expect a consistently high demand for its services to help this high-growth company continue posting strong financial growth, which should help its stock recover fast in the coming months. That’s why I consider Converge Technology the top Canadian high-growth stock to buy this week, especially when it’s down over 40% year to date and has the potential to yield outstanding returns in the long run.