Got $1,000? Buy These Hot Growth Stocks Before They Take Off

Got $1,000 to build a growth stock portfolio? Here are three Canadian multi-bagger stocks in the making.

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You don’t need a lot of cash to start investing in stocks. With plenty of affordable (and even free) stock brokerage options, you don’t need a lot of cash to get started. $1,000 is a great amount to get started.

If you want to grow that $1,000 quickly, here are three Canadian growth stocks that could multiply that over time. A great place to look for multi-baggers is in small-cap stocks.

Two intriguing small-cap stocks are VitalHub (TSX:VHI) and Sylogist (TSX:SYZ).

VitalHub: A healthcare tech stock

VitalHub has a market cap of $200 million. It provides specialized software for the healthcare industry. This includes patient flow and monitoring, operations management, clinic management, and case management.

 Its solutions have gained strong traction in North America, parts of Europe, and Australia. For the first nine months of 2023, its annualized recurring revenue increased 38% to $43 million. Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased 32% to $9.3 million in that time.

This stock has no debt and $30 million of cash. It trades with for a reasonable forward enterprise value (EV)-to-EBITDA ratio of 12.2 times. Both organic and acquisition growth are likely on the playbook in 2024.

Sylogist: A small cap with big organic growth

Sylogist has a market cap of $206 million. This stock provides enterprise and planning software for school districts, municipalities, and charitable organizations.

The company has been immersed in a strategic transformation over the past couple of years. It has a new chief executive officer who has focused on revitalizing its product mix, expanding its sales pipeline, and posturing for consistent mid-teens growth.

Sylogist’s software is very sticky. Its average customer tenure is over 20 years. It has very little churn once it wins a customer. Over the past three quarters, the company has been growing organically by over 18%. EBITDA margins are attractive at +24%.

This stock only has a net debt of $4 million, and it has steadily been paying down debt. Like VitalHub, it is positioned for strong organic growth that is supplemented by product or geographic-enhancing acquisitions. It only trades with an EV-to-EBITDA ratio of 15, which is substantially below its peers right now.

TFI: Big catalysts for value creation

If you are looking for a larger growth stock that still has upside, TFI International (TSX:TFII) is a good fit. It has a market cap of $15.1 billion today. However, it has prospects to more than double in value in the coming years.

TFI has one of the largest trucking and transportation operations in Canada. It is also becoming a major player in the United States.

The company has traditionally grown by acquiring smaller transport operators, revamping and optimizing operations, and then taking their cash flows to reinvest in more businesses. It has acquired close to 200 businesses since its founding.

TFI just acquired a large, specialized freight business in the United States. While it won’t be immediately accretive, it may give it a platform to spin out its freight business from its more profitable less-than-truckload division.

Currently, its stock trades at a large discount to other less-than-truckload stocks. That action could unlock substantial value. TFI trades at an attractive 18 times earnings, even after a good run-up in late December 2023.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has positions in TFI International. The Motley Fool has positions in and recommends Sylogist and Vitalhub. The Motley Fool has a disclosure policy.

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