1 Top Growth Stock to Buy in Bulk

goeasy stock has gained about 506% in the last five years. The ongoing strength in its business indicates that it could deliver similar returns in the coming years.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

Due to the selloff in the equity market, top TSX growth stocks have fallen quite a lot. It is worth mentioning that several growth stocks are trading at multiples that are at a multi-year low and compare favourably to their historical averages. 

Though this decline has erased investors’ wealth, it offers an excellent opportunity to buy stocks of top Canadian stocks at a significantly discounted price. Further, a faster-than-expected recovery in the macro environment could lift these beaten-down stocks significantly. 

The substantial decline in most Canadian growth stocks presents multiple investment options for investors. However, I would recommend investing in goeasy (TSX:GSY). There are numerous reasons why goeasy can deliver multi-fold returns for its shareholders. Let’s look at those factors that indicate that goeasy could comfortably beat the TSX and deliver solid returns. 

Solid double-digit growth

goeasy is a leading non-prime lender that benefits from a large subprime lending market and strong demand. Thanks to the strength in its business, goeasy’s revenue grew at a CAGR (compound annual growth rate) of about 16% from 2011 to 2021. Meanwhile, leverage from higher sales has driven its adjusted net income at a CAGR of 29%.

What stands out is the momentum in goeasy’s business has sustained in 2022, despite the challenges from a weak macro environment. 

For instance, goeasy delivered record revenue of $484 million in the first half, reflecting year-over-year growth of 30%. Moreover, its operating income jumped 38% during the same period. Also, its adjusted net income grew by 15%.

This stellar growth comes from higher loan originations, increased lending volumes, solid credit performance, and momentum across its products. 

goeasy’s management is confident that the momentum in its business will sustain in the coming years and projects double-digit revenue growth. Also, it expects its operating margin to expand by 100 basis points per annum through 2024. 

Its wide range of products, omnichannel distribution, growth in loan volumes, increased penetration of secured loans, and solid credit and payment performance will drive its earnings. 

goeasy: A solid record of boosting shareholders’ wealth

Thanks to its solid sales and earnings growth, goeasy has returned substantial cash to its shareholders through dividend payments and growth.

It has paid a dividend for 18 consecutive years. Moreover, its dividend grew at a CAGR of 34.5% in the last eight years, and it is a Dividend Aristocrat. Given its strong earnings potential, goeasy could continue to enhance its shareholders’ value and increase its dividend at a solid pace. Further, investors can earn a dividend yield of over 2.6%. 

Bottom line: goeasy is poised to create solid wealth for its investors

goeasy stock has appreciated significantly over the past five years (up about 506%) and created massive wealth for its shareholders. The ongoing strength in its business and leading position in the subprime lending market indicates that it could continue to deliver solid growth, which will drive its stock price higher. Also, thanks to the recent pullback, goeasy stock is trading at a next 12-month price-to-earnings multiple of 10.6, which is much below its historical average, presenting an excellent opportunity for buying. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Money growing in soil , Business success concept.
Investing

2 Great Dividend-Growth Stocks to Stash in a TFSA for Decades

CN Rail (TSX:CNR) and another dividend grower look cheap enough to own in a TFSA value fund for the long…

Read more »

Canada day banner background design of flag
Retirement

Essential RRSP Stocks: 2 Canadian Picks to Secure Your Retirement

Two dividend stocks are ideal anchors for Canadians intending to contribute to their RRSPs in 2024 and save for retirement.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Retirement

5 Strategies for Maximizing Your CPP Benefits in 2024 and Beyond

Are you looking for the best way to max out your CPP benefits? Here are some tips you may not…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

Better Artificial Intelligence Stock: UiPath vs. C3.ai

Deciding between UiPath and C3.ai isn't easy since both have strengths and weaknesses.

Read more »

data analyze research
Investing

The 1 Stock to Own in a Sideways Economy

Here's why Restaurant Brands (TSX:QSR) remains a top TSX stock investors shouldn't ignore for long-term gains in this market.

Read more »

Retirees sip their morning coffee outside.
Retirement

Here’s the Average RRSP Balance at Age 65 and 71 in Canada

Canadian investors can consider holding dividend stocks and supplement their CPP and RRSP payouts in retirement.

Read more »

Technology
Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »

sale discount best price
Energy Stocks

Time to Pounce: 1 Phenomenal TSX Stock That Hasn’t Been This Cheap in a While

Now could be the time to get into Cameco (TSX:CCO) stock, which is up 81% in the last year but…

Read more »