The Canadian equity market has continued its uptrend this year, with the S&P/TSX Composite Index rising 1.7%. Solid quarterly performances and signs of easing inflation have increased investor confidence, driving the equity markets. Despite the uptrend in the broader equity markets, the following three growth stocks are under pressure. Given their high growth prospects and attractive valuation, investors with a longer investment horizon could accumulate these stocks to earn superior returns.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) develops technologies and services that support healthcare providers in positively impacting patient outcomes. The company has been under pressure over the last few months, losing 35% of its stock value compared to its 52-week high. Higher net losses during the third quarter appear to have weighed on the company’s stock price, dragging its valuation down. The company trades at one times its total sales for the next four quarters and 14.4 times its earnings for the next four quarters.
With the digitization of clinical procedures and the growing adoption of virtual healthcare services, the demand for WELL Health’s products could continue to rise. Meanwhile, the company is developing new innovative products and artificial intelligence-powered tools, which could strengthen its market share. Further, the tech-enabled healthcare company is also streamlining its operations and optimizing its cost structure, which could improve its operational efficiency and profitability. So, I believe Well Health would be an excellent buy for investors with over three years of investment horizon.
Lightspeed Commerce
Although Lightspeed Commerce (TSX:LSPD) posted a solid third-quarter performance for fiscal 2024 earlier this month, the company has been under pressure due to the management’s cautious outlook. An uncertain macroeconomic environment and the pace of the adoption of Unified Payments in international markets have prompted management to provide a subdued outlook. The company has lost over 36% of its stock value compared to its 52-week high, thus dragging its valuation down. Its NTM (next-12-month) price-to-sales multiple currently stands at two.
Meanwhile, the company’s fundamentals are strong, with its revenue growing by 27%. Also, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) stood at $3.6 million, a substantial improvement from a loss of $5.4 million in the previous year’s quarter. Amid the expansion of its Unified Payments initiative, the company processed around $6.6 billion worth of transactions through its payment solutions, representing a 69% year-over-year growth. Also, these payment transactions formed around 29% of the company’s GTV (gross transaction value).
Further, the Montreal-based company is witnessing its customer base shift towards higher GTV locations. Further, the launch of new products, geographical expansion, and continued adoption of Unified Payments could continue to drive its financials in the company’s quarters. So, despite the near-term volatility, I am bullish on Lightspeed Commerce.
BlackBerry
My final pick is BlackBerry (TSX:BB), which has lost around 55% of its stock value compared to its 52-week high. The lower-than-expected growth in its IoT segment and the management’s fourth-quarter guidance for fiscal 2024 have dragged the company’s stock price down. The company’s management has blamed labour issues in the automotive industry and delays in implementing its products in vehicles by OEMs (original equipment manufacturers) for lower growth.
For the fourth quarter, the company expects its IoT revenue to come between $62 million and $66 million. So, its 2024 revenue from the segment is between $211 million and $215 million, with the midpoint representing a 3.4% growth from the previous year. Earlier, the company had projected the segment to grow at 20%. The weak growth has made investors skeptical, leading to a substantial selloff.
However, given the company’s healthy long-term growth prospects, I believe the selloff is overdone. The company’s cybersecurity segment is growing steadily amid the support of its blue-chip customer base. The increased awareness about vehicle safety and rising demand for connected cars could also boost the demand for its products and services in the coming quarters. So, I believe BlackBerry is an excellent buy at these levels.
