Growth investing is back with a vengeance in 2023. There are excellent buying opportunities this year if you have a medium-risk appetite. The breakouts of these three Canadian growth stocks in different sectors are imminent in the coming quarters.
Ready to fly high
Air Canada (TSX:AC) could finally take off this year after ending 11 consecutive quarters of losses. In the fourth quarter (Q4) of 2022, the net income reached $168 million compared to the $493 million net loss in the same quarter in 2021. Despite the $1.7 billion net loss for the year, the outlook for 2023 is brighter. At $21.20 per share, the stock is up 9.33% year to date.
Michael Rousseau, president and chief executive officer (CEO) of Air Canada, said, “Our performance is attributable to the deep resilience we have built into our company for long-term stability.” Positive cash flows from operations topped $647 million in the same quarter.
Other business highlights include the record fourth-quarter passenger revenues that nearly doubled to $4.062 billion versus Q4 2021. The $4.68 billion operating revenue was also a record and represented a 71% year-over-year increase.
Before 2020, Air Canada had 27 consecutive quarters of profits. The long-awaited comeback is here. Because of renewed optimism, the share price could soar to $40 in one year. The $7.59 billion airline company expects a complete post-pandemic recovery by 2024 when capacity hits 2019 levels.
Tremendous organic growth
The record revenue of Open Text (TSX:OTEX) in fiscal 2023 confirms its standing as one of TSX’s top growth stocks to buy today. Industry analysts covering the tech stock are likewise bullish following eight consecutive quarters of Cloud Organic Growth. At $47.47 per share, current investors enjoy an 18.32% year-to-date gain on top of the 2.71% dividend. A breakout could send the price soaring.
Waterloo-based Open Text, a $12.84 billion growth-oriented company, provides cloud-native solutions through an integrated and flexible Information Management platform. In the three months ending December 31, 2022, total and annual recurring revenues increased 2.4% and 3.6% to US$897 million and US$725 million versus Q2 fiscal 2022.
The quarter’s highlight was the exponential 192.66% year-over-year increase in net income to US$258.5 million. Its executive vice president and CEO said, “We enter 2023 with tremendous momentum and an expanded Information Management market. Open Text’s cash flow profile is strong.”
Impressive earnings growth
The energy sector is in a slump thus far in 2023 but could turn hot in the coming quarters. Many market analysts forecast that energy stocks will deliver outsized gains this year, like in 2021 and 2022. Tamarack Valley Energy (TSX:TVE) trades at a slight discount (-2.21% year to date), although its total gain last year was nearly 19%.
Market analysts recommend a buy rating and forecast the current share price of $4.35 to rise 69.4% to $7.37 in 12 months. Your return potential would be higher to include the 3.39% dividend. In the first three quarters of 2022, net income rose 18% year over year to $294.75 million, while cash flow from operating activities jumped 222% to $577.48 million.
Because of the impressive earnings and cash flow growth of this $2.42 billion oil and gas company in previous quarters, management has committed to increasing the monthly base dividend.
Investors can take calculated risks in Air Canada, Open Text, and Tamarack Valley. The three growth stocks have strong momentum and growth catalysts in 2023 and beyond.