Got $1,000? Buy These Hot Growth Stocks Before They Take Off 

Growth stocks are best when bought at their lows or early in the rally. Now is the time to buy tech stocks before they take off.

| More on:
little girl in pilot costume playing and dreaming of flying over the sky

Image source: Getty Images

If you want to get good returns in the stock market, buy a growth stock when it is trading near its low. Luckily, the tech stock sell-off ahead of the interest rate hikes by central banks created a bear market for all growth stocks. At the same time, it shifted investors’ interest to dividend stocks. Most dividend stocks carry significant debt to finance their operations and generate regular and stable cash flows. But high-interest rates are putting pressure on their profit margins and shifting investor focus back to growth. 

Two growth stocks to buy before they rally

If you have $1,000 in your Tax-Free Savings Accounts (TFSA), why not buy some stocks with good growth potential before the rally takes off.

Dye & Durham stock

Dye & Durham (TSX:DND) stock has already surged 55.6% from its December 2022 levels after the long-due acquisition of Australia’s Link group was terminated. While the acquisition would have brought A$257 million adjusted EBITDA and ~$125 million merger synergies, the delay was eating up other opportunities. The end of the Link deal boosted DND stock up 41% between September 22 and 30, 2022, as it freed up money to invest in other productive opportunities. 

Within two months of cancelling the Link deal, Dye & Durham repurchased 19% of its common shares. Dye & Durham provides workflow efficiency software to business professionals, including legal, finance, and real estate. It enhanced its platform for legal professionals by adding a comprehensive suite of litigation workflow solutions. This solution generates court forms and documents in civil litigation and small claim matters, saving a lot of time. 

Dye & Durham resumed its inorganic growth with the acquisition of United Kingdom’s Insight Legal, a premiere legal practice management technology innovator with more than 900 clients. DND has more than doubled its revenue in FY 2022 through acquisitions while maintaining an adjusted EBITDA margin of 56%. The company has net debt of $676 million, a risk for a software solutions provider firm. But the sticky nature of the platform keeps cash flow stable, allowing it to manage its debt repayment. 

DND revenue is still growing at triple-digits through acquisitions and organic growth. The cloud business solutions provider has the potential to grow in the long term as the economy recovers. You could put, say, $500 in the DND stock and sell it when the stock doubles, doubling your money in the next two to three years. 

BlackBerry stock 

BlackBerry (TSX:BB) stock has already surged 28.6% to $5.84 in January after reaching its pandemic low of below $4.50. The company’s stock fell due to continued declines in its quarterly revenue from its cybersecurity business and a higher churn rate. This decline came as inflationary pressures extended the sales cycle. BlackBerry’s major consumer base is government contracts, and they have not cut down on tech spending, which is good news for BlackBerry. It is optimistic of new contracts and contract renewals, probably in the latter half of 2023 when the central bank puts a pause on increasing interest rates.

Moreover, a significant amount of BlackBerry’s royalty revenue is in the backlog. The company earned revenue from several design wins for its automotive software QNX. The next phase of royalty revenue will be released when the car is in production. The automotive market has been in a tight spot as supply disruptions have affected production. As these supply issues unwind, automotive sales will increase, unlocking Blackberry’s revenue. But it also runs the risk of automakers cancelling the car launch if a recession deepens. 

BlackBerry has $505 million in cash reserves that could help it survive a period of low orders and moderate losses. Once the economic recovery begins, increasing cyber security spending and car sales could drive BlackBerry stock to its average trading price of more than $8, representing a 40% upside. 

Investor takeaway 

The above two growth stocks could grow your money in a recovering economy. If you already own these stocks at a much lower price, keep holding them as there is more growth coming. At the same time, keep your TFSA portfolio diversified across sectors and asset classes (gold and REIT). You could also consider looking at some of these top Canadian stocks

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Tech Stocks

stock analysis
Tech Stocks

Investing in AI: 1 Cheap Tech Stock Poised for Growth

Docebo is a little-known Canadian tech firm that's unlocking the power of next-generation AI technologies.

Read more »

Businessman holding AI cloud
Tech Stocks

5 Tech Stocks You Can Buy and Hold for the Next Decade

Don't make the mistake of thinking all tech stocks are alike. These five have a strong future both behind and…

Read more »

funds, money, nest egg
Tech Stocks

TFSA Investors: 2 TSX Stocks for a Legit Shot at $1 Million in 20 Years

Undervalued TSX tech stocks such as Neighbourly Pharmacy can help investors to turn a $100,000 investment into $1 million in…

Read more »

TIMER SAYING TIME FOR ACTION
Dividend Stocks

TFSA: 3 Value Stocks to Buy in April

The March dip is a synopsis of the mild recession banks anticipate as high interest rates trickles down. It is…

Read more »

Growing plant shoots on coins
Tech Stocks

Got $5,000? These Are 2 of the Best Growth Stocks to Buy Right Now

If you've got $5,000 to invest, buying growth stocks like Lightspeed Commerce and Microsoft is a smart decision.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

2 Easy TSX Stocks for Beginners in April 2023

You don’t need to think twice about loading up on these two Canadian stocks in April.

Read more »

calculate and analyze stock
Tech Stocks

Growth Stocks: A Once-in-a-Decade Opportunity to Get Rich

Growth stocks are generally cheap now. So, this year is a good opportunity to shop for growth stocks, perhaps through…

Read more »

grow money, wealth build
Tech Stocks

$10,000 Invested in These Growth Stocks Could Make You a Fortune Over the Next 10 Years

Growth stocks such as Dollarama and Chewy are well poised to deliver outsized gains to long-term investors.

Read more »