The current market environment has several high-quality stocks trading cheaply, from well-established dividend stocks to companies with significant growth potential, creating a tonne of opportunities to invest today. However, while there are a bunch of opportunities to consider, there is one ultimate growth stock trading dirt cheap that you’ll certainly want to take advantage of right now.
Buying any high-quality stock while it’s undervalued can lead to years of gains. However, growth stocks are often some of the best, particularly in this environment, because they not only have significant recovery potential in the near term but also offer years of growth potential down the road.
Furthermore, while there are many stocks trading undervalued, for example, dividend stocks have seen their prices fall as yields have risen, many growth stocks trade even cheaper due to their higher-risk nature and the fact that a lot of growth stocks can be negatively impacted by a worsening economy.
With many expecting the economy to recover soon, though, and with several stocks trading dirt cheap, now looks like an ideal time to buy high-quality stocks that you plan to hold for the long haul.
So, with that in mind, if you have cash on the sidelines you’re looking to put to work, here’s one of the top growth stocks on the TSX you’ll want to buy right now.
One of the top growth stocks in Canada to buy right now
There are many high-quality growth stocks to consider adding to your portfolio today, but one of the best to buy right now has to be Canadian Tire (TSX:CTC.A).
Canadian Tire may not be the first growth stock that comes to mind. You may not even realize the stock had so much growth potential, considering it’s already a massive company with a market cap north of $8.5 billion.
However, Canadian Tire is a stock that’s not only one of the best retailers and most well-known brands in Canada but also in the midst of a significant years-long growth plan.
Thanks to continuously improving merchandising, the addition of new store openings, attractive value accretive acquisitions in the past and its use of technology coupled with its ultra-popular loyalty program, Canadian Tire has ambitious goals ahead.
So, why is it trading so cheaply today? Canadian Tire, like many other stocks across the country, has been impacted by the worsening economy.
For the full 2023 year, analysts are predicting a slight 3.6% drop in sales. In addition, analysts also predict that the environment will weigh on Canadian Tire’s profitability, with the expectation that normalized earnings per share (EPS) will fall by roughly 34%.
So, it’s not necessarily surprising to see that Canadian Tire stock has fallen significantly in price. However, with analysts already predicting that Canadian Tire will recover in 2024, right now looks like the perfect time to buy this ultimate growth stock.
How do analysts predict Canadian Tire will perform going forward?
Although Canadian Tires’ sales and EPS are expected to be down for the full 2023 year, analysts already predict Canadian Tire will begin to bounce back in 2024.
In fact, analysts estimate that Canadian Tire will improve its normalized EPS by over 17% in 2024 and again in 2025. Even just looking at its 2024 expectations, the stock looks cheap.
Right now, analysts predict Canadian Tire’s 2024 normalized EPS will come in at roughly $14.47. So, considering that the stock is trading right around $147 today, Canadian Tire is trading at just over 10 times its forward earnings. That’s slightly below its three- and five-year average price-to-earnings ratios of 10.6 and 10.8 times, respectively.
Furthermore, analysts estimate that in 2025, Canadian Tire can earn a normalized EPS of roughly $17. So, Canadian Tire is currently trading at just 8.7 times its 2025 earnings, showing just how cheap the stock is today when you factor in its significant growth potential.
And what’s even more impressive is that once the economy finally normalizes, Canadian Tire is expected to grow its sales and profitability for years to come.
Therefore, while this impressive growth stock trades ultra-cheap today, it’s certainly one of the best to buy right now.
