Growth stocks took the backseat in 2022 when inflation rose to record levels. Policymakers at the Bank of Canada were terrified and started an aggressive rate-hike campaign. The situation was terrible for growth-oriented firms, as shown by the below-par performance of TSX’s tech superstar.
Shopify lost 74.80% for the year compared to the 131% average positive return from 2019 to 2021. However, growth stocks rallied in 2023, and Shopify led the resurgence with its 124.43% overall gain. With inflation easing and rate cuts coming, now is an excellent time to take positions in two top growth stocks.
TSX30 winners
goeasy (TSX:GSY) or Trisura Group (TSX:TSU) could turn a $10,000 investment into $50,000 by 2030, or a whopping 400% return. Both stocks have actually risen by that much. At their current share prices, the overall return in seven years is 400.5% and 412%, respectively.
The TSX30 List, a flagship program for Canada’s top growth stocks, was introduced in 2019. goeasy was in the inaugural list (rank #14) and in 2021 (rank #7). Trisura appeared in 2020 (rank #16), 2021 (rank #3), and 2022 (rank #10). While both weren’t included in the fifth edition last year, their growth potential is enormous.
Don’t expect linear growth in the stock prices; instead, anticipate spikes and dips. Still, the overall return within seven years should be close, more or less, based on business performance and historical trends.
Top compounder
goeasy has outperformed the big bank stocks in the last three years. The 33-year-old, $2.65 billion alternative financial services company helps borrowers that banks and other traditional financial institutions reject or don’t extend credit. As of this writing, GSY trades at $159.22 per share and pays a 2.41% dividend.
The non-prime consumer lender rose to prominence in 2021 when it achieved several milestones. goeasy’s consumer loan receivable portfolio rose above $2 billion. goeasy also acquired LendCare, a leading point-of-sale consumer financing provider. Besides recording 82 consecutive quarters of positive net income in the fourth quarter, the board increased the dividend for the eighth consecutive year.
At the close of the third quarter (Q3) of 2023, the loan portfolio is $3.43 billion, while loan origination is $722 million. Management said the credit and payment performance are stable. After three quarters in 2023, revenue and net income increased 22% and 54.5% year over year to $922 million and $173 million, respectively.
Growing, profitable specialty insurer
Trisura is a niche player in the financial services sector. The $1.85 billion specialty insurance company provides Surety and Risk Solutions and Corporate Insurance to clients in Canada and the United States. Its business is growing and profitable due to a diversified specialty platform.
The specialty insurer reported mighty impressive results for the full year 2023. In the 12 months ending December 30, 2023, insurance revenue and net income climbed 38.4% and 140.8% year over year to $2.8 billion and $66.9 million, respectively.
Its president and chief executive officer, David Clare, said the business remains well-capitalized besides measured growth, profitable underwriting, and enhanced investment income. At $38.98 per share, TSU is up 14.95% year to date versus the TSX’s +0.24%.
Spectacular returns
goeasy and Trisura are ideal options for growth investors. Both companies have endured massive headwinds in recent years. The stocks could deliver and repeat the spectacular returns in the last seven years.
