Canadian growth stocks have witnessed a sharp recovery in the last few weeks, as the Bank of Canada’s and the U.S. Federal Reserve’s latest monetary policy decisions strengthened the possibility that the central banks are willing to ease their monetary stance in the near term. The recent sharp recovery in high-growth stocks is the primary reason why the main TSX index has risen more than 5% in the ongoing quarter after diving by 3% in the previous one.
Cooling inflationary pressures and other economic indicators hint that this could just be the beginning of a long-term rally in growth stocks as the macroeconomic scenario continues to improve. Considering that, it could be the right time for investors to consider adding such fundamentally strong stocks to their portfolios. Let me quickly highlight two of my favourite TSX growth stocks you can consider in December 2023.
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Nuvei stock
Nuvei (TSX: NVEI) has been one of the worst-performing TSX growth stocks in the last two years. After losing nearly 58% of its value last year, NVEI stock currently trades with 7.4% year-to-date losses. Nonetheless, rising hopes about interest-rate cuts in the next year have triggered a spectacular rally in this growth stock in recent weeks. That’s why after rallying by more than 44% in November, Nuvei has already advanced by another 14.4% in December so far.
This Montréal-headquartered fintech firm primarily focuses on providing payment technology solutions to e-commerce and other businesses globally. The Canadian growth firm currently has a market cap of $4.4 billion, as its stock trades at $31.85 per share.
Even as the challenging macroeconomic environment has affected the demand to some extent, Nuvei has managed to post a strong double-digit sales growth in recent quarters. In the first three quarters of 2023, the company’s total revenue rose 39.4% YoY (year over year) to US$868.4 million with the help of a 62% YoY jump in its total volume. However, several negative factors like weakness in the crypto market, foreign exchange headwinds, and some one-time financial charges affected its earnings during this period.
As an expected economic recovery strengthens the demand for Nuvei’s innovative payment technology in the coming years, its financial growth trends could accelerate and help its share prices rally.
Celestica stock
Celestica (TSX: CLS) could be another high-growth stock on the TSX you can consider in December 2023. This Toronto-based company primarily focuses on providing manufacturing and supply chain solutions to businesses across the globe. Unlike Nuvei, CLS stock has outperformed the broader market by a huge margin in 2023 as it currently trades at $39.49 per share with solid 159% year-to-date gains, increasing its market cap to $4.7 billion.
The main reason for Celestica’s outstanding year-to-date gains could be the strength in its ongoing financial growth trends despite macroeconomic uncertainties. In the first three quarters of 2023, the company’s total revenue has gone up by 11.8% YoY to US$5.8 billion. Unanticipated strong market demand and better-than-expected mix have also driven its adjusted earnings up by 23.7% YoY during the same three quarters combined to US$1.67 per share.
While Celestica’s financial growth already looks strong, potential interest rate cuts in the next year could lead to improved economic growth and drive the demand for its services even higher. Given that, I expect this TSX growth stock to maintain its strong upward momentum in the near future.
