A ton of stocks began the last year trading at double digits before the equity market experienced a selloff. Growth stocks across sectors were pummeled, driving down valuations and share prices in the past 15 months. You can now buy quality TSX stocks trading at a lower multiple and a lower share price to benefit from outsized gains once market sentiment recovers.
Here, we look at two such TSX stocks trading below $10 you can consider buying right now.
Payfare stock
A fintech company that offers services such as digital banking, instant payment, and loyalty-reward solutions to the workforce part of the gig economy, Payfare (TSX: PAY) is valued at a market cap of $290 million.
Its fintech platform aims to provide financial security to workers globally with a digital bank account and a payment card that offers instant access to employee earnings as well as cash-back rewards.
Payfare has increased its sales from just $6.3 million in 2019 to $130 million in 2022. The company forecasts 2023 sales to range between $185 million and $195 million, with adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) forecast between $21 million and $24 million.
It is actively working on acquiring white-label partnerships while expanding into international markets with existing partners. Payfare is likely to launch credit products for its user base and collaborate with new merchants to widen its suite of cashback and loyalty rewards for cardholders.
Priced at $6.15 per share, Payfare stock is valued at less than two times forward sales and 19 times forward earnings, which is very cheap for a growth stock. Analysts tracking the TSX stock expect adjusted earnings to touch $0.64 per share in 2024, up from a loss of $0.06 per share in 2022.
Down 60% from all-time highs, Payfare stock is trading at a discount of 100% to price target estimates.
StorageVault Canada stock
The second under-$10 TSX stock on my list is StorageVault Canada (TSX: SVI), a company valued at a market cap of $2.3 billion. It owns, manages, and rents self-storage and portable storage space in Canada.
StorageVault manages 34 stores owned by third parties and ended 2022 with close to 238 storage locations and 4,500 portable storage units in the country.
Despite a difficult macro-environment, StorageVault increased sales by 26% year over year to $262 million in 2022. Its net operating income also surged by 27% to $176 million.
It completed $241.1 million in acquisitions last year, which includes the expansion of its records management and professional information business. StorageVault’s same-store sales were up 11.4%, indicating a majority of top-line growth was driven by acquisitions.
The company stated, “Looking ahead, we have already further reduced our variable rate debt exposure and expect to increase our cash flow through improving operations and revenue management. The expansion of two existing stores will be completed this year and we expect to acquire $70 to $100 million of assets in 2023.”
SVI stock has returned a staggering 2,660% to shareholders in the last 10 years. It’s currently priced at a discount of 25% to consensus price target estimates.
