Yesterday, the Bureau of Labor Statistics announced the United States consumer price index rose by 3.2% in July, representing an increase of 0.2% from June. However, the inflation numbers were lower than analysts’ projections of 3.3%, thus driving the equity markets higher. The S&P/TSX Composite Index rose 0.3% higher yesterday and traded 4.9% higher compared to June lows.
However, the following two Canadian growth stocks have not participated in this recovery rally. They are trading at a considerable discount from their 52-week highs, thus creating a timely entry point for long-term investors.
Cargojet
Cargojet (TSX: CJT) is a Canadian cargo airliner that offers a unique next-day delivery service, covering 90% of the Canadian population. Amid the economic uncertainty and weak quarterly earnings, the company has lost around 40% of its stock value compared to its 52-week high. On the back of a steep correction, the company trades 1.6 times analysts’ projected sales for the next four quarters, which looks attractive for a stock that has historically delivered consistent financial performance.
Further, the cargo airliner’s long-term growth prospects also look healthy as the demand for its services could rise amid e-commerce growth and the accelerating transition towards narrow-body aircraft by passenger airlines. To meet the growing demand, the company plans to add around six aircraft over the next three years, increasing its fleet size to 47 aircraft by 2026.
Besides, Cargojet enjoys a substantial competitive advantage over its peers, given its expanded coverage connecting 16 major airports across Canada, long-term contracts with its clients, and 54 international alliances or partnerships with top logistics companies. Further, the company also pays a quarterly dividend of $0.286/share, with a yield currently at 1.24%. Considering all these factors, I believe the company could deliver multi-fold returns over the next 10 years.
Lightspeed Commerce
Second on my list would be Lightspeed Commerce (TSX: LSPD), which offers an omnichannel commerce platform to small- and medium-scale businesses. Earlier this week, it reported its first-quarter performance for fiscal 2024, which ended on June 30. For the quarter, the company’s revenue grew by 20%, with transaction-based and subscription revenue growing by 32% and 7%, respectively.
Aided by the topline growth, its net losses declined from $100.8 million to $48.7 million. However, removing special items, its adjusted net losses stood at $2.2 million, a substantial improvement from a loss of $17.6 million in the previous year’s quarters. Also, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) losses were below the management’s guidance of $10 million at $7 million.
Further, the omnichannel solutions provider could benefit from the growing shift towards higher GTV (gross transaction value) customer locations. During the quarter, the consumer locations with GTV of $500,000/year and $1,000,000/year grew by 10% and 11%, respectively. However, the consumer locations with GTV of less than $200,000/year declined compared to the previous year’s quarter.
Further, the company’s innovative product launches and expanding market presence could boost its financials in the coming quarters. The management also projects a breakeven adjusted EBITDA or even better this fiscal year. Despite its improving financials and healthy outlook, Lightspeed is down over 30% compared to its 52-week high, while its NTM (next 12 months) price-to-sales multiple stands at an attractive 2.5.
Investor takeaway
Boosted by improving investor sentiments, these two beaten-down growth stocks could be excellent buys for investors with longer investment horizons.
