The economy has performed better than many feared over the past year, lifting investors’ appetite for growth stocks. While growth stocks offer a high rate of return, they can be highly volatile. Thus, investors should focus on shares of fundamentally strong companies with the potential to deliver profitable growth in the long term.
Against this backdrop, let’s look at three Canadian stocks to buy with $3,000 right now.
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goeasy
Growing at a compound annual growth rate (CAGR) of over 36% in the past five years, goeasy (TSX:GSY) stock is a no-brainer. The company offers secured and unsecured lending to non-prime consumers and has been growing its revenue and earnings rapidly, which supports the uptrend in share price.
It’s worth highlighting that this financial services company has grown its top line at a CAGR of 19.6% in the last five years. Moreover, its earnings per share (EPS) increased at a CAGR of 31.9% during the same period.
goeasy is well-positioned to capitalize on the large subprime lending market. Moreover, its ability to drive loans, diversify revenue sources, and achieve stable credit performance and operational efficiency will enable it to grow its revenue and earnings at a double-digit rate in the upcoming years. Besides capital gains, goeasy’s investors will likely benefit from its solid dividend growth. The company is a Dividend Aristocrat and has increased its dividend for nine consecutive years.
Overall, goeasy’s solid growth potential, dividend growth, and low price-to-earnings ratio of 10.2 make it a compelling investment near the current levels.
Dollarama
Dollarama (TSX:DOL) operates a defensive business but offers solid growth. Thanks to its low-risk business, DOL stock is less volatile. Moreover, it appreciated nearly 185% in five years, outperforming the broader equity market by a significant margin. In addition, Dollarama consistently enhances its shareholders’ value through increased dividend payments.
Dollarama’s sells a wide range of products at low price points. This drives value-conscious shoppers to its stores. This Canadian retailer’s revenue has a CAGR of 10% since fiscal 2011 (FY11) thanks to the higher traffic. At the same time, Dollarama’s net earnings increased at a CAGR of 16%.
Dollarama’s value pricing strategy and large store base will likely drive its top line in the coming years. Higher sales, a focus on reducing merchandise costs, and direct product sourcing will help the retailer to drive its earnings and distribute a higher dividend.
Shopify
Shares of the Canadian tech giant Shopify (TSX:SHOP) should be part of your portfolio, despite its recent bull run. While this growth stock has nearly doubled over the past year, it is still trading at a significant discount from its highs. Shopify stock has grown at a CAGR of about 39% in the last five years and delivered a return of 415%.
Shopify’s durable revenue growth, led by higher merchandise volumes and a structural shift in selling models towards multichannel platforms, acts as a catalyst. Furthermore, its focus on innovation, growing adoption of its digital products, and asset-light business model bode well for growth.
Shopify maintains a dominant positioning in the e-commerce space and will benefit from the ongoing digital shift. Further, its improving take rate and focus on delivering sustainable earnings support its bull case.
