Shopify (TSX: SHOP) has been among the hottest TSX stocks in the past decade. Down 63% from all-time highs, Shopify stock has still returned over 2,400% to shareholders since its initial public offering in 2015. Currently valued at a market cap of $100 billion, Shopify trades at a steep valuation given its decelerating growth rates and tepid profit margins.
Similar to other e-commerce platforms, Shopify is also wrestling with a slowdown in sales due to sluggish consumer demand and the reopening of economies. Additionally, it is forecast to end 2023 with adjusted earnings of $0.66 per share, indicating it trades at 120 times forward earnings, which is quite steep.
Here are two cheaper growth stocks I’d consider buying over Shopify today.
Nuvei stock
A fintech company, Nuvei (TSX: NVEI) stock is down 50% from record prices. Nuvei provides payment technology solutions to merchants and partners in North America, Europe, the Middle East, Latin America, and Africa. Its platform allows customers to accept payments irrespective of their location or device.
Nuvei’s portfolio of solutions includes an integrated payments platform with global processing capabilities, a turnkey solution for payments, and a suite of data-driven business intelligence tools as well as risk management services.
In the second quarter (Q2) of 2023, Nuvei’s payments volume rose by 68% while sales were up 45% year over year on the back of new customer wins and a growing pipeline across regions. The company also focused on wallet share expansion with existing customers and is on track to end the year with revenue of $1.6 billion in sales, an increase of 42% compared to the year-ago period.
Unlike other high-growth tech companies, Nuvei generates consistent profits. Its adjusted earnings are forecast to expand to $2.89 per share in 2024, up from $2.49 per share in 2022. Priced at 7.7 times forward earnings, Nuvei is among the cheapest growth stocks on the TSX.
Its strong cash generation profile provides it with the flexibility to reinvest in growth, prioritize debt repayment, and return excess capital to shareholders.
Nuvei recently introduced a cash dividend and pays shareholders $0.10 per share each quarter, translating to a yield of 2.4%. Due to its cheap valuation, Nuvei stock trades at a discount of 90% to consensus price target estimates.
Green Thumb Industries stock
Another cheap growth stock is U.S.-based cannabis giant Green Thumb Industries (CNSX: GTII). Shares of Green Thumb have surged close to 60% in the last month on the possibility that cannabis might be decriminalized in the U.S. at the federal level.
Among the largest multi-state operators south of the border, Green Thumb has more than 80 retail stores in 15 states. Armed with a portfolio of brands catering to different customers, Green Thumb reported revenue of $252.4 million and a net income of $13.4 million in Q2.
Compared to other loss-making marijuana producers, Green Thumb has reported a positive GAAP (generally accepted accounting principles) net income for 11 consecutive quarters.
Priced at 25 times forward earnings, GTII stock is quite cheap and is well positioned to take advantage of marijuana legalization in the U.S. and other global markets. Analysts remain bullish and expect Green Thumb shares to surge over 100% in the next 12 months.
