Canadian growth stocks are trading at depressed valuations due to a range of macroeconomic headwinds. But the stock market volatility allows investors to buy quality stocks at a discount and benefit from compounded gains over time.
As several growth stocks across sectors are down significantly from all-time highs, it’s time to go bottom fishing right now. Let’s take a look at two top Canadian growth stocks that investors can buy in November 2022.
Cargojet
A company that provides air cargo services in Canada, Cargojet (TSX:CJT) stock is valued at a market cap of $2.24 billion. Its air cargo business includes the operation of its domestic air cargo network and services between 14 cities in North America on an ACMI (aircraft, crew, maintenance, and insurance) basis.
Cargojet has increased sales from $455 million in 2018 to $758 million in 2021. It is among the top-performing stocks on the TSX and has returned close to 1,900% to shareholders in the last decade. However, CJT stock is also down 48% from all-time highs.
Cargojet expects the double whammy of inflation and rising interest rates to lower consumer spending in the near term. But the company remains bullish on e-commerce, which is likely to be a strong driver of sales for its domestic network and ACMI business.
Cargojet continues to capture revenue growth from the shift in online sales fueled by the pandemic showcasing the resiliency of its business model.
Analysts expect Cargojet sales to rise by almost 30% year over year to $983 million in 2022. However, an inflationary environment might drag profit margins lower by almost 14% to $8.19 per share this year. So, CJT stock is valued at 2.3 times forward sales and 16 times forward earnings, which is quite reasonable for a growth stock.
The company also pays investors a quarterly dividend of $0.286 per share, translating to a forward yield of 0.90%. These payouts have risen at an annual rate of 7.3% in the last 10 years.
Given consensus price target estimates, CJT stock is trading at a discount of 35%.
Well Health Technologies
Another beaten-down growth stock on the TSX is Well Health Technologies (TSX:WELL). The Canadian health-tech company went public in April 2016. Between its initial public offering and February 2021, WELL stock surged by a staggering 8,000%. It’s now trading 70% below all-time highs, valuing the company at a market cap of $662 million.
Over the years, Well Health has expanded its top line at an accelerated pace on the back of highly accretive acquisitions. Its sales have grown from just $32.8 million in 2019 to $302.3 million in 2021. Analysts expect sales to touch $557 million in 2022 and $619 million in 2023.
While still unprofitable, Well Health’s robust revenue growth will narrow its losses to $0.06 per share in 2023 compared to a loss of $0.23 per share in 2021.
Well Health’s patient visits and interactions continue to gain traction due to healthy growth in its U.S.-based virtual services business. Further, the acquisition of Circle Medical and Wisp will drive sales higher, as these businesses have exceeded an annual revenue run-rate of $100 million, indicating year-over-year growth of 124%.
Analysts expect WELL stock to more than double in the next 12 months.
