Want to Beat the Market? 2 Stocks to Watch

Quality TSX growth stocks such as Trisura trade at a compelling valuation and at a discount to consensus price target estimates.

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The equity markets have delivered inflation-beating returns to investors over time despite multiple economic downturns and bear markets. While the broader markets have helped you generate game-changing wealth, there are several growth stocks that are positioned to outpace the TSX index in 2024 and beyond.

Here are two such quality growth stocks you can consider buying today.

Trisura Group stock

Valued at a market cap of $2 billion, Trisura Group (TSX:TSU) has been on an absolute tear, rising over 470% in the last five years. Trisura Group is a specialty insurance provider operating in segments such as surety, risk Solutions, and corporate insurance. It has investments in wholly-owned subsidiaries through which it conducts insurance and reinsurance operations.

Trisura ended the fourth quarter (Q4) of 2023 with an operating net income of $25.9 million, or $0.54 per share, due to profitable underwriting and enhanced investment income. Comparatively, its annual operating income in 2023 stood at more than $110 million.

Trisura emphasized that continued expansion with distribution partners allowed it to increase revenue by 38.4% year over year in 2023. It ended Q4 with a combined ratio of 85.8%, which measures insurers’ profitability. Basically, the ratio is the sum of incurred losses and operating expenses measured as a percentage of the premium earned.

The company’s net investment income grew by 71% in Q4, reaching $16.2 million due to its widening investment portfolio and higher yields. At the end of 2023, the book value of Trisura’s investment portfolio stood at $619 million.

Trisura is forecast to rise from $2.34 per share in 2023 to $2.72 per share in 2024. So, priced at 15.3 times forward earnings, Trisura stock is quite cheap given its growth estimates. Analysts remain bullish and expect it to surge almost 40% in the next 12 months.

Brookfield Business Partners stock

Founded in 2016, Brookfield Business Partners (TSX:BBU.UN) is an acquisition-focused private equity firm. It invests in sectors such as business services, infrastructure services, construction, energy, and industrials and aims to generate annual returns of 15% on these investments.

In 2023, Brookfield Business reported a record adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$2.5 billion, indicating a margin of 19%. In addition to strong results, the company generated over US$2 billion from capital-recycling initiatives, allowing it to reduce corporate borrowings and strengthen its balance sheet.

Brookfield Business emphasized the EBITDA of its five largest companies rose 10% year over year with a margin of over 25%. These companies are market leaders and provide mission-critical services to customers while accounting for the majority of earnings and cash flow.

In the last five years, Brookfield Business has invested US$6 billion in capital to acquire several high-quality businesses, resulting in robust earnings.

Due to its steady and widening cash flows, Brookfield Business Partners pays shareholders a quarterly dividend of US$0.0625 per share, indicating a forward yield of over 1%. These payouts have risen by over 50% in the last eight years.

Down 56% from all-time highs, BBU stock is poised to outpace the broader markets when investor sentiment improves.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Trisura Group. The Motley Fool has a disclosure policy.

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