The Federal Reserve continued to fight against rising prices by raising interest rates by 25 basis points on Wednesday. With the recent failure of Silicon Valley Bank and Signature Bank, investors fear the rising interest rates could further aggravate contagion risk in the banking sector. So, amid these fears, the Canadian benchmark index, the S&P/TSX Composite Index, fell 0.6% yesterday.
With the Federal Reserve indicating another rate hike this year, I expect the equity markets to remain volatile in the near term. However, long-term investors can ignore these short-term fluctuations and go long on these two quality stocks to earn superior returns in the long run.
Nuvei
Nuvei (TSX: NVEI) is a fintech company that facilitates businesses to transact with next-gen payment methods. With the increased adoption of online shopping, digital payment is becoming popular. Amid the favourable environment, the company’s total revenue grew by 34% last year. Its revenue and adjusted net income increased by 16% and 10%, respectively. During this period, the company has launched several innovative new products, ventured into new markets, and expanded its APMs (alternative payment methods) portfolio to drive its financials.
Meanwhile, I expect the uptrend to continue. Last month, Nuvei acquired Paya Holdings, which offers commerce solutions in high-growth verticals, such as healthcare, utilities, government, and non-profit organizations, for $1.3 billion. The company could also benefit from the expanding addressable market. Amid these growth initiatives, the company’s management expects its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) could grow by 45% and 29.5%, respectively.
Meanwhile, in the medium term, Nuvei hopes to grow its revenue at an annualized rate of 20% while making a capital expenditure of 4-6% annually. The management is also optimistic that its adjusted EBITDA margin could cross 50% in the long term. Despite these growth prospects, the company trades at an attractive NTM (next 12-month) price-to-earnings multiple of 19.3, making it an attractive buy.
WELL Health Technologies
Second on my list is WELL Health Technologies (TSX: WELL), which reported an impressive fourth-quarter performance on Tuesday. Supported by acquisitions over the last four quarters and solid organic growth, the company’s revenue grew by 35% to $156.5 million. During the quarter, the company had 991,268 omnichannel patient visits, representing 42% year-over-year growth and an 11% increase from the previous quarter.
Along with the top-line growth, WELL Health’s gross profits increased by 26% to $80.2 million. However, its gross margin fell from 54.9% to 51.3%. Meanwhile, the company generated an adjusted net income of $12.5 million during the quarter, representing a 23.8% increase from the previous year’s quarter. Amid its solid fourth-quarter performance, the company’s stock price has increased by over 7% compared to Monday’s closing price.
Meanwhile, I expect the uptrend to continue amid the expanding addressable market and the company’s continued acquisition. With the development of innovative products and increased penetration of internet services, more people are adopting telehealthcare services, benefiting WELL Health. The company continued to expand its presence through acquisitions in Canada, the United States, and Germany. For 2023, the company’s management expects its revenue and EBITDA to grow in double digits. So, given its healthy growth prospects and an attractive NTM price-to-earnings multiple of 15.3, I am bullish on WELL Health.
