The TSX Composite Index recently reached its highest level in over 21 months. While optimism from largely better-than-expected corporate results is helping the Canadian stock market inch up, many growth stocks are still underperforming the broader market as uncertainties about the timing of upcoming interest rate cuts keep tech investors on their toes.
While these uncertainties could keep growth stocks volatile and unpredictable in the near term, a temporary decline in their share prices could be an opportunity to buy such high-quality stocks at discounted prices and hold for the long term. If you have $1,000 to invest, here are two Canadian growth stocks that are worth considering right now while they’re on sale in 2024.
Lightspeed stock
Lightspeed Commerce (TSX: LSPD) is the first beaten-down Canadian growth stock you can consider in February 2024. After rallying by nearly 44% in 2023, LSPD stock has slipped 34% this year so far, erasing all its gains from the previous year. With this, it now trades at $18.37 per share with a market cap of $2.8 billion.
A selloff in Lightspeed stock started on February 8 after its quarterly financial results came out. In the third quarter of its fiscal year 2024 (ended in December), the Montréal-headquartered tech firm’s total revenue rose 27% YoY (year over year) to US$239.7 million, exceeding its guidance. Its adjusted quarterly net profit of US$11.8 million reflected a massive improvement over its net profit of US$0.39 million a year ago. Similarly, its latest net profit figure was also significantly higher than Street analysts’ expectations of US$3.9 million.
A significant contributor to this success was the unified payments initiative, leading to a 69% YoY increase in gross payment volume to US$6.6 billion. Lightspeed’s global market presence strengthened, with its flagship products now nearly universally available. Encouraged by these strong results, the company’s management also decided to upgrade the lower end of its fiscal year 2024 revenue guidance. Given these positive results, the recent big declines in LSPD stock make it look highly undervalued, in my opinion.
BlackBerry stock
Another appealing Canadian growth stock that seems to be discounted at the moment is BlackBerry (TSX: BB), which is a good choice for long-term investing. The Waterloo-headquartered enterprise software firm currently has a market cap of $2.1 billion in its stock trades at $3.66 per share after losing nearly 35% of its value in the last year.
Interestingly, BlackBerry has been beating Street analysts’ net profit expectations for 10 consecutive quarters. In the quarter ended in November 2023, the company’s total revenue rose 3.6% YoY to US$175 million with the help of growth in its revenue from both cybersecurity and IoT (Internet of Things) segments. Compared to the previous quarter, its IoT segment revenue rose 12%, while the cybersecurity segment sales inched up by around 44%.
As the demand for reliable cybersecurity solutions for businesses is expected to skyrocket in the coming years, BlackBerry’s cybersecurity segment could post stronger growth. Similarly, the long-term outlook for its IoT segment also remains strong as the company continues to focus on expanding its portfolio of advanced technological solutions for the automotive industry. Considering this outlook, this growth stock looks really underpriced.
