The TSX is on a mild run but is still short of its 8.12% total return in 2023 (+5.5% year to date). However, the tailwind that could trigger a full-blown bull run is an interest rate cut. On April 10, 2024, the Bank of Canada held its policy rate steady at 5%.
Market analysts expected the decision as the policymakers want to see sustained progress in the fight against inflation. The inflation rate in February was 2.8% versus 2.9% in January, and the March reading will come out on April 16, 2024.
Thus far, only rate-sensitive sectors such as communications services, utilities, and real estate are in red territory. Energy is the top performer, with a 24.68% market-beating return.
However, if you’re investing today, Propel Holdings (TSX:PRL) and CES Energy Solutions (TSX:CEU) are strong buys. Both stocks have stormed out of the gate in 2024 but could skyrocket because of their thriving businesses.
AI-powered platform
Propel Holdings boasts a proprietary online lending platform with artificial intelligence (AI) capabilities. The $782.65 million financial technology company facilitates credit products, including installment loans and lines of credit under various brands, to Canadian and American borrowers through its platform. It also offers analytics, marketing, and loan servicing services.
At $22.80 per share, current investors are up 77.04% and partake in the 2.85% dividend. Prospective investors can earn two ways from this fintech stock: dividends and capital gains. Market analysts’ 12-month high price target is $31.11, with an upside potential of 36.45%.
In the fourth quarter (Q4) and full year 2023, revenue grew 54% and 40% year over year to US$96 million and US$316.5 million. Net income rose 68% and 84% in the same periods to US$8.5 million and US$27.8 million from a year ago. All the results are new records for the company. On December 5, 2023, the board approved an 11% dividend hike.
“We are proud to end 2023 with another year of significant growth in both revenue and profitability,” said Clive Kinross, chief executive officer (CEO) of Propel. He added that with the AI-powered underwriting platform, the company was able to facilitate credit access and build financial opportunities for a record number of underserved consumers.
Management sees a tremendous growth opportunity in the core business this year. Propel plans to expand its Lending-as-a-Service offering, broaden its product suite, and venture into new geographies.
Cash-generating business model
CES Energy Solutions is poised for a break out following its impressive full-year 2023 financial results. This energy stock is a steal at $5.66 per share (+65.12% year to date). Moreover, the dividend yield is 2.57% after the recent 20% increase.
The $1.31 billion company manufactures and provides advanced consumable fluids and specialty chemicals to Canadian and American companies in the Oil & Gas Equipment & Services industry. In the 12 months ending December 31, 2023, revenue increased 13% year over year to a record $2.16 billion.
Notably, net income and funds flow from operations climbed 62% and 29% to $154.6 million and $251.6 million, respectively, from a year ago. At year-end 2023, free cash flow was $211.6 million. According to management, CES generates significant surplus cash flow because its underlying business model is capital expenditure-light and asset-light.
Winning stocks
Propel Holdings and CES Energy Solutions could be TSX’s top growth stocks in 2024. Both are dividend payers and could deliver outsized capital gains.
