Holding undervalued growth stocks in a TFSA (Tax-Free Savings Account) can help you deliver game-changing returns over time. You basically need to identify a portfolio of stocks that have the potential to grow their sales and earnings at an enviable clip in the next 10 years and buy shares of these companies at every major dip.
Any returns in the form of dividends or capital gains are exempt from Canada Revenue Agency taxes if these qualified investments are held in a TFSA. Here are two quality, beaten-down growth stocks TFSA investors should consider buying in 2024.
Is CRWD stock a good buy right now?
CrowdStrike (NASDAQ: CRWD) is a cyber-security giant firing on all cylinders. Valued at US$56 billion by market cap, CRWD stock is down 20% from all-time highs and has more than doubled in 2023.
CrowdStrike offers a robust cloud-based artificial intelligence-powered cybersecurity platform to enterprises.
In fiscal Q3 2024 (ended in October), CrowdStrike reported sales of US$786 million, an increase of 35% year over year. Its annualized recurring revenue, or ARR, also rose 35% to US$3.2 billion, while free cash flow grew 37% to US$239 million, indicating a margin of over 30%.
Unlike several other growth stocks, CrowdStrike is now delivering GAAP (generally accepted accounting principles) profits and ended Q3 with net income of US$3.2 million.
A research report from Canalys stated that CrowdStrike is the leading endpoint protection platform and remains ahead of larger rivals such as Microsoft and Palo Alto Networks in this vertical. Moreover, CrowdStrike was the fastest cybersecurity company to exceed US$1 billion in cumulative revenue from the Amazon Web Services marketplace, showcasing that companies are adopting its products at a fast clip.
Analysts tracking CRWD stock expect adjusted earnings to expand from US$1.54 per share in fiscal 2023 to US$3.70 per share in fiscal 2025. So, priced at 63.5 times forward earnings, CRWD stock is not cheap.
However, analysts remain bullish as Wall Street has a high target price of US$275 on the tech stock, indicating an upside potential of 16% from current levels.
What is the target price of Nuvei stock?
A Canadian tech stock, Nuvei (TSX: NVEI) trades 80% below all-time highs. But it’s priced at less than 10 times forward earnings, which is very cheap given Nuvei’s stellar growth estimates.
A fintech company, Nuvei offers payment processing solutions to small and medium enterprises in Canada and other international markets. The total volume processed on Nuvei’s platform rose 72% to US$48.2 billion in Q3 of 2023, with e-commerce accounting for 88% of the total volume.
Nuvei increased sales by 55% to US$305 million in Q3, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) surged 36% to US$110.7 million, indicating a margin of over 35%.
Due to its robust profit margins, Nuvei also pays shareholders an annual dividend of US$0.55 per share, indicating a forward yield of 2%. Nuvei is positioned to increase dividends at an accelerated pace, especially if it continues to grow the top line and benefit from high operating leverage.
Analysts remain bullish on NVEI stock and have a high target price of $60, which is 110% above the current trading price.
