1 Oversold Growth Stock to Buy for Major Returns in 2023

This growth stock could be the best Canadian stock to buy now for 2023, with shares possibly doubling back to 52-week highs.

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When it comes to finding actual cheap stocks, it’s can be pretty difficult right now. While there are plenty on the TSX today that continue to trade downwards, not all of them are actually in oversold territory. That includes the growth stock I’m going to discuss today based on the Relative Strength Index (RSI).

However, this growth stock could be the best Canadian stock to buy right now for the next year. In fact, it could be the best one for the next decade! And while its RSI doesn’t fall within oversold territory, there are plenty of other ways that this growth stock remains undervalued.

Recession first; bull market after

Canadians continue to brace themselves for a recession. The Bank of Canada just increased the interest rate once more — now at 4.5% and the highest since December 2007. This is likely to push us more into recession territory, spurring a downward spiral for the first part of 2023.

But that’s the first part. After a recession comes a bull market, and analysts believe that could happen by the second half of 2023. So, if you’re looking for a growth stock to buy, it’ll be during this time when shares continue to drop. Very soon, those shares will rise much, much higher.

One of the most undervalued areas of the market right now is the tech sector. That’s because these companies soared high, with a growth stock hitting all-time highs followed by investors taking their returns at even a hint of a downturn.

Now, there are a few tech stocks that remain completely undervalued. And today, I’m going to cover possibly the best Canadian stock to buy among them.

Lightspeed stock

Lightspeed Commerce (TSX:LSPD) got an unfair shake when it came to this recent downturn. In fact, shares collapsed far sooner than other tech stocks. This came from a short-seller report back in September 2021. After hitting $160 per share, those shares dropped 30% after the report and continued falling afterwards.

Now, Lightspeed stock trades at $22 as of writing. That’s a decrease of 86% for this once-great growth stock. But, honestly, it’s due to be great once more, and right now, it is oversold in my books.

The company has beat out earnings estimates over the last two quarters, with Lightspeed stock finally showing the worth of its over $2 billion in acquisitions. In fact, it continues to expect to see its adjusted earnings before interest, taxes, depreciation, and amortization fall within its guidance. However, this is in part due to a major layoff of 300 people recently.

Even so, investors will be happy that the company continues to focus on profitability — something other e-commerce companies may not be able to achieve, especially during a recession. That is why it’s a growth stock that remains quite valuable.

Headed back up?

Now, I’m not saying that Lightspeed stock will suddenly hit all-time highs once more. That’s far off but could be down the line in the next decade. That being said, it could certainly achieve 52-week highs once more at $45, which is just over double today’s share price. That alone should create plenty of interest among investors.

Lightspeed stock now trades at just 0.74 times book value, with an incredibly low 0.79% of equity needed to pay off all its debts! So, this is a strong growth stock with a stable balance sheet just waiting to climb once more.

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 Amy Legate-Wolfe has positions in Lightspeed Commerce. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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