Last week, the U.S. Commerce Department announced that the GDP (gross domestic product) in the fourth quarter rose by 3.3%, higher than Wall Street’s estimate of 2%. Solid GDP numbers and expectations of interest rate cuts by central banks have improved investors’ confidence, driving the global equity markets higher. Year to date, the S&P/TSX Composite Index is trading 1.2% higher as of Monday’s closing price.
Amid the growing optimism, here are three growth stocks that you can buy under $20 to earn superior returns in the long run.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) has been under pressure over the last few months, losing around 35% of its stock value compared to its 52-week high. Despite solid topline growth in the third quarter, the digital healthcare company’s net losses rose to $4 million, which weighed on its stock price. Meanwhile, the company has taken several cost optimization initiatives to improve its cost efficiency and operating cash flows.
Besides, the company is continuing with its expansion strategy. Currently, it is working on acquiring 13 clinics through the absorption method and 30 clinics through M&A (merger and acquisition). Also, the digitization of clinical procedures has created long-term growth potential for the company. Further, the company has reported a record 1.2 million patient visits and 1.9 million patient interactions during the fourth quarter. Amid these solid operating metrics, the digital healthcare provider is confident of posting positive EPS (earnings per share) and adjusted EPS in the fourth quarter.
Considering its improving financials, healthy growth potential, and discounted stock price, WELL Health would be an excellent stock to have in your portfolio.
Savaria
Another under-$20 stock that I am bullish on would be Savaria (TSX:SIS). The company, which offers accessibility solutions to physically challenged people, has witnessed solid buying since November, with its stock price rising by over 32%. Its solid third-quarter performance and strengthening of broader equity markets drove the company’s stock price higher.
During the quarter, its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 4.3% and 8.3%, respectively. Besides, its adjusted EBITDA margin expanded by 60 basis points to 16%. With around $204 million of available funds, the company is in an excellent position to fund its growth initiatives.
Meanwhile, Savaria’s outlook looks healthy amid rising demand for accessibility solutions due to increasing income levels and a growing aging population. Besides, high backlog levels and cross-selling initiatives could drive its financials in the coming quarters. Also, the Quebec-based company hopes to reach revenue of $1 billion by the end of 2025. SIS stock offers a monthly dividend, with its forward yield at 3.18%, and trades at 1.3 times its next four-quarter sales, making it an attractive buy.
BlackBerry
Another under-$20 growth stock I am bullish on is BlackBerry (TSX:BB). The intelligent security software provider has been under pressure over the last few months, losing around 50% of its stock value compared to its 52-week high. Although it posted better-than-expected third-quarter earnings, the company has been under pressure due to its weaker fourth-quarter guidance.
BlackBerry’s management expects its fourth-quarter revenue from its IoT (Internet of Things) business to come in between $62 million and $66 million, substantially lower than its earlier guidance. The company has blamed the impact of labour shortages and delays in implementing its software products in vehicles for slashing its guidance.
However, BlackBerry’s long-term growth potential remains intact amid the growing adoption of connected car software in vehicles and its focus on developing innovative technological solutions. So, I believe the steep correction offers an excellent entry point for long-term investors.
