The S&P/TSX Composite is vibrant, with 11 primary sectors and thousands of stocks to choose from. Most investors lean toward the sectors with the highest percentage weights. Four sectors comprise 73.89% of the index’s total weight.
The financial (35.44%) and energy (17.27%) sectors dominate with more than 50% percentage weight combined, followed by materials (10.60%) and industrials (10.58%). However, some investors have excellent options in other sectors.
WELL Health Technologies (TSX: WELL), StorageVault Canada (TSX: SVI), and Wildbrain (TSX: WILD) belong to the healthcare, real estate, and communications services sectors. These cheap growth stocks are ready to break the TSX mould.
Long-term growth stock
WELL Health continues to impress with its market-beating returns. At $3.72 per share, the year-to-date gain is 31.34%, while the overall return in five years is 693.62% (51.26% compound annual growth rate, or CAGR). The $895.66 digital healthcare company is Canada’s largest owner and operator of healthcare clinics.
Management aims to enhance WELL’s market leadership as the country’s first pan-Canadian clinical network. The competitive advantage is a highly integrated network of tech-enabled outpatient healthcare clinics across the country.
In the third quarter (Q3) of 2023, revenue increased 40.2% year over year to $204.5 million — a new record. WELL’s founder and chief executive officer (CEO), Hamed Shahbazi, said, “Q3 was an outstanding quarter for us, as we achieved record patient visits, adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization], and posted our first quarter ever with more than $200M in revenues.
Shahbazi added that WELL made significant investments in artificial intelligence. The company commits to supporting healthcare providers with the most advanced technology.
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Doable growth strategy
StorageVault is Canada’s largest storage provider, with over 238 storage locations (206 owned) nationwide. Besides self-storage solutions, the $1.75 billion company also provides last-mile storage and logistics solutions as well as professional records management services.
Governments, commercial entities, and individuals form the customer base of this 13-year-old safe keeper of belongings. The real estate stock is down 22.13%, but market analysts are bullish. Their 12-month low price target is $7, a potential 49.5% jump from the current share price of $4.68. SVI also pays a modest 0.24% dividend.
Its chief financial officer, Iqbal Khan, said there’s robust demand for SVI’s space. In Q3 2023, revenue increased 9.2% year over year to $75.74 million. Net income reached $14.28 million compared to a net loss of $3.47 million in Q3 2022. SVI desires to have multiple stores in each market. The growth strategy focuses on acquisitions, organic growth, and store/business expansions.
Flying under the radar
WildBrain flies under the radar and is absurdly cheap at $1.10 (-64.74% year to date). It focuses on entertainment for kids and families globally. The team specializes in content creation, audience engagement, and global licensing.
The $225.9 million company produces award-winning series The Snoopy Show and Teletubbies, among others. WildBrain’s television group owns and operates some of Canada’s most-viewed family entertainment channels.
Although revenue has declined to $105.5 million and net loss has widened to $15.5 million in Q3 2023, WildBrain expects a turnaround in 2024. The company will concentrate on key brands and launch a new CG-animated Peanuts feature film on Apple TV+.
Far from mediocre
The stocks in focus sell for under $5 per share but are not mediocre investments, especially WELL Health Technologies. All three could deliver superior returns than the typical investors’ choices.
