Growth stocks have the potential to deliver superior returns in the long run due to their higher growth prospects. However, these companies require higher capital to fund their growth. These companies trade at expensive valuations as investors are ready to pay the premium to earn superior returns. So, investors with longer time frames and higher risk-taking abilities could buy these stocks to earn multi-fold returns.
Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) offers small- and medium-scale enterprises cloud-based omnichannel commerce and payment solutions. Amid the improvement in broader equity markets and solid second-quarter earnings of fiscal 2024, the company has witnessed healthy buying since the beginning of October. Its stock price has increased by over 30% during the period. However, it still trades at an 85% discount compared to its all-time high.
Further, the Montreal-based tech company’s growth prospects look healthy amid the ongoing shift towards an omnichannel-selling business model. It has also launched new products and artificial intelligence-powered tools to meet the growing needs of its customers. Its customers continue to adopt multiple modules, thus expanding its high gross transaction value (GTV) customer base. Further, its Unified Payments initiative and expansion of its payment solutions to new markets could drive its financials in the coming quarters.
Bolstered by these growth initiatives, Lightspeed’s management expects its fiscal 2024 revenue to grow 21.5%. Also, the management is confident of breaking even or delivering positive adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) this fiscal year, making it an attractive buy.
goeasy
Another growth stock that I am bullish on would be goeasy (TSX: GSY), which offers leasing and lending services to subprime customers. It has grown its revenue and adjusted EPS (earnings per share) in double digits since 2000. Supported by these solid performances, the company has returned over 17,000% since 2000 at a CAGR (compound annual growth rate) of 25%. Despite the strong growth over the last two decades, the company has acquired a smaller percentage of its addressable market. So, it has a high scope for expansion.
Amid stable credit and payment performance, the company’s net charge-off rate has declined to 8.8% in the recently reported third quarter compared to 9.3% in the previous year’s quarter. Its allowance for future credit losses has declined from 7.42% to 7.37%. Notably, the company has adopted next-gen credit models, tightened its credit tolerance limits, and enhanced its underwriting and income verification processes, which could boost its operating performances. So, its growth prospects look healthy.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a tech-enabled healthcare provider that develops products and services to help healthcare providers improve their patient outcomes. The company reported a 40% topline growth in its recently reported third quarter. However, its net losses more than doubled to $4.5 million, leading to a pullback in its stock price.
Meanwhile, the company has initiated an enterprise-wide cost-optimization initiative, which can improve its cost efficiency and cash flows. Further, the company is also working on acquiring 13 clinics through its absorption program and 30 clinics through mergers and acquisitions, which could boost its financials. The company could also benefit from the growing adoption of telehealthcare services and increased digitization of clinical procedures.
Amid these growth initiatives, WELL Health’s management expects its 2024 topline to reach $900 million, representing an 18% year-over-year growth. So, given its high-growth prospects and the initiatives taken by the management to improve its profitability, I am bullish on WELL Health.
