The Canadian government introduced the TFSA (Tax-Free Savings Account) in 2009 to encourage Canadians to save more. It allows investors to earn tax-free returns on a specified amount of contribution room. For this year, the contribution room is $6,500. However, the cumulative amount would be $88,000.
If an investor can grow the $88,000 at an annualized rate of 13%, he will have $1 million in the 20th year. A single or a couple of stocks can’t deliver over 13% annualized returns for 20 years. Stocks can reach maturity and their returns slow down. So, investors should be vigilant and shift their investments into other high-growth stocks when the stock arrives at its maturity stage. Meanwhile, here are two top Canadian growth stocks with the potential to deliver over 13% of annualized returns over the next five years.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) facilitates healthcare practitioners to provide omnichannel healthcare services across Canada and the United States. Amid the development of new innovative products and increased internet penetration, more patients are adopting telehealthcare services. Besides, telehealthcare services are becoming popular owing to their convenience and accessibility. Meanwhile, Grand View Research projects the global telehealth market to grow at a CAGR (compound annual growth rate) of 24% through 2030, thus expanding the addressable market for the company.
Meanwhile, the company is focused on expanding its footprint through strategic acquisitions and developing innovative products to drive growth. Last week, WELL acquired CarePlus Management, which could diversify its operations to include recruitment and revenue-cycle management services. Boosted by the acquisition, the company has raised its 2023 revenue guidance to $740–$760 million.
Besides, the company has launched an AI (artificial intelligence) investment program to develop AI-powered innovative tools. These tools could lower administrative burdens while enhancing customer experience. Meanwhile, WELL stock trades at 1.5 and 16.3 times its projected sales and earnings for the next four quarters, respectively, which looks cheap considering its growth prospects. So, I believe WELL Health would be an excellent growth stock to buy right now.
Nuvei
Second on my list would be Nuvei (TSX:NVEI), which facilitates small- and medium-scale businesses to accept next-gen payments. The company operates in over 200 markets, accepting 150 currencies and 615 APM (alternative payment methods). Amid e-commerce growth, digital payments are expanding. Meanwhile, Grand View Research projects the global digital payment market size to grow at a CAGR of over 20% through 2030. The expanding addressable market could benefit Nuvei, which is looking to strengthen its position worldwide.
Meanwhile, Nuvei raised its investments by over 40% in the March-ending quarter to develop new technology and products. Besides, the company’s expanding APM portfolio, new customer wins, synergy from the recent acquisition of Paya Holdings, and strengthening of its sales and marketing team could support its financial growth in the coming quarters. Additionally, the company also services iGaming and online betting companies in the growing United States markets.
Meanwhile, Nuvei’s management expects its revenue to grow by over 20% annually in the medium term. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin could also increase to 50% in the long run. Despite its healthy growth prospects, NVEI stock trades at an NTM price-to-earnings multiple of 16.3, making it an attractive buy.
