The US consumer price index rose 3.1% in November, a decline from 3.2% in the previous month. Amid signs of easing inflation, the Federal Reserve has kept its benchmark interest rates unchanged for the third time, indicating that the rate hike cycle could be over. Further, policymakers also signaled three rate cuts in the next year.
The improvement in the macro environment has driven equity markets higher, with the S&P/TSX Composite Index rising 1.8% this month. Amid improving investor sentiments, you can buy the following two growth stocks to earn superior returns in 2024 and beyond.
Nuvei
Nuvei (TSX: NVEI), which offers payment technology solutions, has witnessed solid buying since the beginning of November, with its stock price rising 76%. Improving broader investor sentiments and its impressive third-quarter performance drove the stock price. The company processed around $48.2 billion of transactions during the quarter, representing a 72% increase from the previous year’s quarter. Besides, its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 55% and 36%, respectively.
Meanwhile, I expect the uptrend in the company’s financials to continue amid the increasing popularity of digital transactions. Notably, the company is enhancing its product offerings, strengthening its digital capabilities, and expanding its APM (alternative payment methods) portfolio to access local markets, which could improve its market share. It also opened a new office in Shanghai, China to support its expansion in the Asia-Pacific region. So, the fintech company’s growth prospects look healthy.
After reporting its third-quarter earnings, Nuvei has raised its 2023 guidance. The midpoint of its new revenue and adjusted EBITDA guidance represents year-over-year growth of 40% and 22.7%, respectively. Further, management expects its topline to grow 15-20% in the medium term, while its adjusted EBITDA margin could expand to 50% in the long run.
Despite the recent surge in its stock price, Nuvei trades at an around 80% discount compared to its all-time high. Also, its NTM (next 12 months) price-to-earnings multiple stands at an attractive 12.6, making it an excellent buy.
goeasy
goeasy (TSX: GSY) would be another growth stock that I am bullish on. The subprime lender has delivered consistent performance over the last two decades, growing its revenue and adjusted EPS (earnings per share) in double digits. Despite solid growth, the company has acquired a small percentage of its addressable market. So, it has substantial scope for expansion.
Meanwhile, the value lender has been developing new products, strengthening its distribution points and channels, and expanding its footprint to drive growth. Besides, it has adopted an enhanced underwriting and income verification process, introduced next-generation credit models, and made credit adjustments across its product suites to lower default rates. The company’s total delinquency declined from 5.6% to 5.1% in the September-ending quarter, while its net charge-off rate fell from 9.3% to 8.8%.
Amid these growth initiatives, goeasy’s management has provided an optimistic three-year guidance, with its loan portfolio expected to grow 48.7% to reach $5.1 billion in 2025. Besides, its revenue could grow at 18.5% CAGR (compound annual growth rate), while its operating margin could improve to 38% in 2025. Despite its healthy growth prospects, the company trades at an NTM price-to-sales multiple of 1.8, making it an attractive buy.
