After witnessing the steep downside correction in the previous three months, the Canadian stock market has witnessed a handsome recovery in November 2023. The recent cooler-than-expected inflation numbers from the United States have raised investors’ hopes that the Federal Reserve will soon start easing its monetary policy stance. This is one of the key reasons why the TSX Composite benchmark has rallied by more than 6% so far this month, with renewed buying in Canadian growth stocks.
While these factors have driven the sharp rally in growth stocks of late, many of them still look undervalued to buy for the long term. And the great news is you can start your investment journey in growth stocks with an investment as low as $2,000. Let’s look at two of such top Canadian growth stocks I find really attractive to buy now.
OpenText (TSX:OTEX) is a Waterloo-based tech firm that primarily focuses on providing information management services to organizations across the globe, which ultimately help them optimize their digital supply chains. The company currently has a market cap of $14.3 billion, as its stock trades at $52.64 per share with a strong 13.7% month-to-date gains. This growth stock, however, still has seen 5% value erosion in the last five months.
A sharp recovery in OpenText started earlier this month after the release of its largely better-than-expected quarterly financial results on November 2. Even as macroeconomic concerns continue to affect businesses across the globe, OpenText’s YoY (year-over-year) revenue growth rate improved to 67.3% in the September 2023 quarter from 65.2% in the previous quarter.
More importantly, this Canadian growth stock has been posting improvements in its YoY adjusted earnings growth rate for three consecutive quarters. Last quarter, its earnings rose 31.2% YoY to $ 1.01 per share, along with solid gains in its annual recurring revenue.
With its continued focus on new quality acquisitions, OpenText seems on track to achieve its free cash flow targets soon. Given that, the recent gains in this Canadian growth stock could just be the start of a long-term rally.
Air Canada stock
Air Canada (TSX:AC) has also been one of the most ignored growth stocks by investors of late. After losing 60% of its value in the previous three years, AC stock currently trades with 6.1% year-to-date losses in 2023 at $18.20 per share, trimming its market cap to $ 6.5 billion.
In my opinion, these losses make the growth stock look highly undervalued, as it has already seen a spectacular post-pandemic financial recovery. In the first three quarters of 2023, the largest Canadian passenger airline company’s revenue jumped 40.3% YoY to $16.7 billion as the demand for air travel continued to improve.
Stronger demand, along with lower aircraft fuel expenses, have helped Air Canada post adjusted earnings of $3.41 per share in the first three quarters of this year against its adjusted net loss of $2.46 in the same three quarters of the previous year. Despite these positive factors, this Canadian growth stock hasn’t seen any appreciation, making it look cheap to buy for the long term.