These TSX growth stocks are screaming buys. If you’re able to hold through the volatility, they could be huge winners in the coming years.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM.A) is a large-cap stock that has participated in this market correction. Shares were too cheap to ignore, triggering a bid up of approximately 12.7% in the stock in the past two trading days (as of writing).
The shares are still undervalued despite its growth potential. The global alternative asset manager is a magnet for capital. For example, fund inflows since the last quarter are at US$33 billion, pushing up its deployable capital to US$125 billion.
The spinoff of its asset management business could make both the operating business and the asset management business more agile and flexible for future growth. Over the next five years, an investment today could deliver annualized returns north of 13%, including a yield of about 1.2%. If it dips to $55 or lower per share, it’d be an even louder screaming buy.
TELUS International
TELUS International (TSX: TIXT) is a growth engine with durable profitability. Like other growth stocks, it has had its share of stock valuation compression. Specifically, after rising more than 40% from a low this year to $40 per share, it’s now trading at a low of $26 and change per share. Now that it trades at close to its 52-week low, you should purchase some shares if it fits your investment objectives.
TELUS International provides end-to-end IT service solutions from idea generation to user experience or user interface design to the final delivery of the solution. It operates in 28 countries, servicing clients in a range of industries: communications and media, travel and hospitality, e-commerce, technology, fintech and financial services, games, and healthcare.
Its year-to-date revenue growth was 15% to US$1.8 billion and operating income growth was 83% to US$223 million. Management expects adjusted earnings-per-share growth to be about 20% this year.
Continued double-digit profitable growth could drive upside of +40% again over the next 12 months if the macro environment were to cooperate.
A small-cap tech stock that could double your money
If you could pay 50 cents for $1 of a stock, would you do it? Right now, this exact opportunity has presented itself through Converge Technology Solution (TSX: CTS). But be ready for a wild ride. From as low as 90 cents per share in 2020, the small-cap tech stock ran up to as high as $13 in 2021 in a growth stock bubble driven by quantitative easing and low interest rates.
Converge is a better tech stock than many. It grows organically and inorganically. Other than growing its revenues, management has also increased its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a cash flow proxy, and its earnings. Specifically, the tech stock turned a profit in 2021, and it appears to be durable.
Immense growth continues at Converge. Year to date, its net revenue climbed 71% to $1.7 billion, adjusted EBITDA rose 68% to $99.8 million, and its adjusted earnings per share increased by 55%.
It has been growing its services business, which currently make up roughly 28% of its operations. The macro environment eventually turning a new leaf could double investors’ money!
