In 2009, the Canadian government introduced the TFSA (tax-free savings account) to encourage citizens to save more. It allows investors above 18 years to earn tax-free returns on a specified amount called contribution room. For 2023, the Canada Revenue Agency has fixed the contribution room at $6,500. Meanwhile, the cumulative amount for an investor who was 18 or above in 2009 was $88,000.
If an investor invested this amount in stocks that grow at over 13% annually, he would have over $1 million by the end of 20 years. Here are my two growth stocks, both of which have the potential to grow at a healthier rate and deliver oversized returns for years to come.
Nuvei
Nuvei (TSX: NVEI) is a financial services company that offers payment solutions to a wide range of customers globally. The company operates in over 200 markets, supporting 150 currencies and over 600 alternative payment methods. With the growing popularity of online payments amid the expansion of e-commerce, the demand for its products and services is rising. Meanwhile, Grand View Research expects the global digital payments market to grow at an annualized rate of over 20% for the rest of this decade.
Amid the expanding addressable market, Nuvei is focusing on innovative product launches, making strategic acquisitions, growing its APM (alternative payment methods) portfolio, and venturing into new markets to boost its sales. Last year, it launched 96 new products and added new APMs to increase its portfolio to 603. The company’s recent acquisition of Paya Holdings has strengthened its position in high-growth verticals across the United States. The digital payments solutions provider also expanded its product offering in Australia, thus allowing its clients to access the full suite of payment solutions.
Besides payment solutions, Nuvei has acquired licenses to service regulated online sports betting operators in several states across the United States. So, the company’s growth prospects look healthy. Meanwhile, Nuvei’s management expects its revenue to grow at an annualized rate of 20% in the medium term. Also, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin could cross 50% in the long term. Despite its healthy growth prospects, NVEI stock trades at an attractive NMT (next 12 months) price-to-earnings multiple of 20.1, making it an attractive buy.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is another stock that offers impressive long-term growth prospects as the adoption of virtual healthcare services rises. Supported by technological advancements and growing internet penetration, the telehealthcare services market is growing at a healthier rate. Meanwhile, Grand View Research projects the global telehealthcare market to grow at a CAGR of 24% through 2030.
Supported by its aggressive expansion, strategic investments, and development of innovative products, WELL Health is well-positioned to benefit from market expansion. Its recent acquisitions have strengthened its position in Canada and expanded its presence in the United States. Last month, the company made a strategic investment in a German-based medical practice management software company, doctorly GmbH. The investment could aid WELL Health in expanding its footprint in Germany and later across Europe.
Despite its high-growth prospects, WELL Health trades at an attractive NTM price-to-sales and NTM price-to-earnings multiples of 1.7 and 16.5, respectively. So, considering its growth prospects and attractive valuation, I believe WELL Health would be a worthy buy for long-term investors.
