Growth stocks lost steam to start 2022 and suffered a sharp correction. The technology sector, where most growth-oriented companies belong, are deep in the red with its 42.21% year-to-date loss. However, if you’re looking for the top growth stocks to buy right now and hold for the long term, skip the e-commerce giants.
Absolute Software (TSX: ABST) and Verde AgriTech (TSX: NPK) are better buys for strong product demand and growing market. Both stocks are also beating the market so far in 2022.
Cyber security and cyber resilience
Absolute Software didn’t succumb to the market rout in September 2022 and instead advanced 12.6% from August 31, 2022. At $15.98 per share, current investors enjoy a 37.7% year-to-date gain in addition to the 2% dividend yield. Market analysts covering the stock have a 12-month price target between $18.41 (average) and $23.17 (high).
The $815.79 million company is the lone provider of self-healing, intelligent security solutions globally. Absolute Software help customers manage and secure their data, devices, and applications with an unbreakable connection to every endpoint, whether on or off network.
In fiscal 2022 (12 months ended June 30, 2022), recurring revenue increased 64% year over year to US$191.5 million. Its president and chief executive officer (CEO) Christy Wyatt said 2022 is Absolute’s strongest year in recent history. Wyatt noted the increasing awareness of Security and IT teams on the need for cyber defense and cyber resilience.
Among the product and service highlights in fiscal 2022 were the rise in mission-critical applications in Absolute’s Application Resilience library to over 60. Apart from scaling the business in international markets, Absolute struck strategic partnerships with AT&T, Dell, Hewlett Packard, and Lenovo. It also acquired NetMotion and launched the first-ever self-healing Zero Trust platform.
For fiscal 2023, management expects an adjusted revenue growth between 14.8% and 17.1%. However, investors should look at the bigger picture. Industry experts project the global cyber security market to grow from US$155.83 billion in 2022 to US$376.32 billion by 2029, or a compound annual growth rate (CAGR) of 13.4% within the forecast period.
Agricultural technology
Verde Agritech is among the top-performing stocks in the last 12 months. At $4.75 per share, the trailing one-year price return is 271.7%. Had you invested $20,000 a year ago, your money would be worth $74,218.75 today. On a year-to-date basis, the gain is 69.64%.
The $248.11 agri-tech company is a potash multi-nutrient fertilizer producer whose purpose is to improve the health of all people and the planet. In the first half of 2022, revenue grew exponentially by 483% to $36.16 million versus the second quarter of 2021. Net profit reached $13.84 million compared to the $1.53 net loss in the same quarter last year. Sales volume grew 112% year over year to 202,255 tonnes.
Management said the impressive growth over the second quarter of 2022 was underpinned by increased productivity and the market’s growing demand for its product and price increase. More importantly, the quarterly performance reflects Verde’s ability to generate significant free cash flow in the long term. For the full-year 2022, the sales target is 1,000,000 tonnes.
Potential multi-baggers
Absolute Software and Verde AgriTech are ideal long-term holdings and potential multi-baggers in the near to medium terms. Now is the best time to take positions in one or both growth stocks.
