Yesterday, the U.S. Bureau of Labor Statistics announced that the Consumer Price Index for February rose by 6% compared to the previous year. The annual inflation numbers had been slowly declining from the peak of 9.1% in June 2022. The easing jitters over contagion in the banking sector after the failure of Silicon Valley Bank and Signature Bank appear to have improved investors’ sentiments. So, the S&P/TSX Composite Index rose by 0.5% yesterday.
Amid improving investors’ sentiments, here are three top Canadian growth stocks you could buy right now to earn multi-fold returns over the next 10 years.
Nuvei
Earlier this month, Nuvei (TSX: NVEI) reported its fourth-quarter performance, with its revenue growing by 4%. However, removing the impact of unfavourable currency translation and volatility in digital assets and cryptocurrencies, the company’s revenue in constant currency increased by 26%. Organic growth drove its top line, with the company launching 96 new products, adding new APMs (alternative payment methods) to its portfolio, and expanding its customer base.
Despite its top-line growth, the company’s adjusted net income declined by 4% amid higher SG&A (selling, general, and administrative) and interest expenses. It also generated an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $85.7 million, representing a 6% decline compared to its previous year’s quarter. Further, the company closed the quarter with a cash balance of $752 million. So, the company is well equipped to fund its growth prospects.
Meanwhile, I expect the uptrend in Nuvei’s financials to continue amid the growing popularity of digital payments. The company’s management has provided optimistic guidance for this year, with its revenue and adjusted EBITDA projected to grow by at least 45% and 29.5%, respectively.
Meanwhile, in the medium term, the company’s management expects its revenue to grow at 20% annually. Also, its adjusted EBITDA margin could cross 50% in the long run. So, given its solid financials, high growth prospects, and an attractive NTM (next 12-month) price-to-earnings multiple of 19.2, I expect Nuvei to deliver multi-fold returns in the long run.
WELL Health Technologies
The pandemic-induced restrictions have accelerated the adoption of telehealth care services. The development of innovative products and increased penetration of internet services are expanding the market. Meanwhile, Data Bridge Market Research projects the North American telehealthcare market to grow at an annualized rate of 10% through 2027. So, given the market conditions, I have selected WELL Health Technologies (TSX: WELL) as my second pick.
Despite easing pandemic-induced restrictions, the company continues to grow at a higher rate. In 2022, the company had 3.5 million omnichannel patient visits, representing a 50% year-over-year growth. The company is expanding its footprint in Canada and the United States through strategic acquisitions. Also, it has recently made a strategic investment in doctorly GmbH, a comprehensive practice management software provider in Germany.
Despite its healthy growth prospects, WELL Health trades at an attractive NTM price-to-earnings multiple of 17.8, making it an excellent buy for long-term investors.
Docebo
My final pick is Docebo (TSX: DCBO), which offers an artificial intelligence-powered learning platform to businesses across sectors. With the surge in remoter working and learning, the demand for learning management software (LMS) is rising, thus expanding the addressable market for the company. Meanwhile, Markets and Markets projects the LMS market to grow at an annualized rate of 18.4% from 2022 to 2027.
Supported by its multi-product learning suite, Docebo is growing its financials at a healthier rate. Its recurring revenue has increased at a compound annual growth rate of 52% for the last six years. During the same period, its customer base has expanded from 900 to 3,400 while its average contract value has increased four times. A substantial percentage of its clients have signed multi-year agreements, which is encouraging.
So, considering its solid financials and high growth prospects, I am bullish on Docebo.
