Growth stocks are companies with the potential to grow their financials above the industry average, thus delivering superior returns in the long run. Due to their high growth potential, these companies usually trade at a higher valuation. However, these companies are riskier than dividend stocks due to their higher valuation and susceptibility to market volatility. Having discussed the characteristics of growth stocks, here are three top growth stocks you could buy now to earn solid returns in the long run.
WELL Health Technologies
The telehealthcare sector is growing amid the increased penetration of Internet services and introduction of innovative digital products. Meanwhile, Data Bridge Market Research projects the North American telehealth market to grow at a rate of 10% until 2029. In this expanding addressable market, I have picked WELL Health Technologies (TSX: WELL) as my first pick.
Driven by the growing adoption of telehealthcare services, the company had around 1.5 million total patient interactions in the June-ending quarter, representing an annual run-rate of 6 million. Supported by strong organic growth and continued acquisitions, the digital healthcare company grew its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 21.8% and 5.1%, respectively.
Meanwhile, I expect the uptrend in WELL Health’s financials to continue as the company expands its footprint across North America through acquisitions. Also, it has launched an artificial intelligence investment program, which could aid in developing next-generation tools. Considering its growth prospects and an attractive NTM (next 12 months) price-to-earnings multiple of 13.5, I expect the company to deliver multi-fold returns over the next 10 years.
Nuvei
Another growth stock that offers multi-year growth potential would be Nuvei (TSX: NVEI), a payment processing company that allows its clients to accept next-generation payment methods. With more customers shifting towards online shopping, digital payments are becoming popular, thus increasing the demand for Nuvei’s products and services.
To meet the growing demand, the payment solutions provider has introduced new innovative products, expanded its APM (alternative payment methods) portfolio, and launched an artificial intelligence-powered data and analytics platform to drive growth. Besides, the company is also strengthening its position in the iGaming segments by venturing into new markets and expanding its customer base.
Also, management expects to make a capital investment of around 4–6% of its revenue in the medium term, which could aid in driving its financial growth in the coming years. The management also hopes to achieve revenue growth of 15–20% in the medium term while increasing its adjusted EBITDA margin of over 50% in the long run.
Dollarama
My final pick would be Dollarama (TSX: DOL), a discount retailer with healthy long-term growth potential. Over the previous 12 years, the company has delivered double-digit top- and bottom-line growth. Supported by this strong performance, DOL stock has delivered 1,647% returns at an impressive CAGR (compound annual growth rate) of 26.9%. Continuing its uptrend, the discounted retailer is trading 13.1% higher this year.
Meanwhile, the company reported an impressive second-quarter performance today, with its revenue and diluted EPS (earnings per share) beating estimates. Supported by solid same-store sales growth of 15.5% and a net addition of 81 stores over the previous four quarters, the company’s revenue grew by 19.6%. Along with top-line growth, the expansion of gross margins and increased contributions from Dollarcity drove its net income. The discount retailer posted a diluted EPS of $0.86, representing 30.3% growth from its previous year’s quarter.
Besides, Dollarama has planned to increase its store count to 2,000 from its current 1,525 by 2031. Also, the expansion of Dollarcity from 458 stores to 850 stores by 2029 could support its financial growth. So, I believe Dollarama would be an excellent long-term bet.
