The rally of technology stocks to start 2023 surprised nervous investors considering the impact of rising interest rates on the high-growth sector last year. As of this writing, the worst-performing sector in 2022 outperforms the TSX year to date (+22.5% versus +5.52%).
Moreover, the 11 primary sectors could rebound mightily if the downward trajectory of inflation sustains. The Bank of Canada didn’t raise interest rates this month (the second time this year) and forecasts the rate to come down to 3% by mid-2023. With a potential bull market on the horizon, it’s time to prepare and take positions in three outstanding growth stocks.
Grand comeback
Nuvei (TSX: NVEI) tanked in 2022 and lost 58% overall for the year. Nobody gave the embattled tech stock a chance to make a grand comeback. However, at $57.11 per share, current investors are up nearly 66% year to date. The $7.97 billion global payments technology company is one of the top picks for growth investors today.
The fintech firm deserves serious consideration following the impressive volume growth last year. Its chairman and chief executive officer (CEO), Philip Fayer, said, “2022 was another strong year for Nuvei, highlighted by Total volume growth of 39% on a constant currency basis.” He added that Nuvei is off to a great start in 2023 and operating in a position of strength.
Management projects a +20% annual year-over-year revenue growth in the medium term. Meanwhile, market analysts’ 12-month average and high price targets are $74.61 (+30.6%) and $121.16 (+112.2%).
Robust growth objectives
Aura Minerals (TSX: ORA), the top growth stock in 2021 and 2022, should be on your buy list. The back-to-back TSX30 winner could do it again this year. At $11.24 per share, the mining stock enjoys a 41.74% positive return thus far in 2023. Market analysts recommend a buy rating and see a return potential (high) of 60.1% in one year.
This $794.29 million multinational gold and copper mining company develops and operates gold and metal projects in the Americas. Its president and CEO Rodrigo Barbosa said, “In 2022, we laid the groundwork to meet our robust growth objectives in the coming years to reach over 450,000 GEO (gold equivalent ounce) annualized by 2025.”
For 2023, Barbosa said Aura has important milestones to reach. Management expects the Aranzazu mine (Mexico) to continue to operate at a high pace. The EPP mines (Brazil) should reach higher grades in the second half of the year, while the San Andres mine (Honduras) production level should gradually improve.
Significant growth ahead
CAE (TSX: CAE) flies under the radar but shouldn’t last long. The $10.17 billion company manufactures simulation technologies, modelling technologies, and training services. It caters to civil aviation, defence & security, and healthcare clients.
The undervalued industrial stock trades at $32.02 (+22.3% year to date) and could climb 18.7% based on market analysts’ price forecasts. CAE’s business thrives, shown by the third-quarter (Q3) fiscal 2023 results. In the three months that ended December 31, 2022, revenue and operating income increased 20% and 120% year over year to $1 billion and $145.9 million versus Q3 fiscal 2022.
Marc Parent, CAE’s president and CEO, is excited about the prospects in civil aviation and expects significant growth during and beyond the ongoing global market recovery.
Outsized gains
Nuvei, Aura Minerals, and CAE could deliver outsized gains in a bull market, as inflation eases and rate-hike cycles end.
