Many TSX stocks have already had a decent year, but there could be some more upside for a select few. Whether it be a valuation multiple re-rating, better-than-expected earnings growth, or both, certain quality growth stocks could have considerable upside.
Here are four TSX growth stocks that could surprise to the upside this year.
A small insurance business that could become substantially larger
Trisura Group (TSX: TSU) has a pretty nice record of growth. Its stock is up 531% in the past five years. Now, the past few years have been a bit bumpy. However, that appears to be changing.
This company provides specialty insurance in Canada with growing fronting models in both Canada and the U.S.
In its first quarter of 2024, revenues were up 16.5%, and normalized earnings per share rose 11.5%. Its normalized return on equity was 20% (which is outpacing most industry peers).
Trisura currently trades at a significant discount to similar-type U.S. peers. If it can continue to perform, it should get both the uplift from growing earnings and an improved stock valuation.
A tech stock with a quality turnaround strategy
Sylogist (TSX: SYZ) is a small-cap technology company in the midst of a turnaround strategy. It provides specialized enterprise and planning software for school districts, municipalities, and non-for-profits. These tend to be lower-growth sectors, but they are very stable.
With a new chief executive officer at the reins, the company has bolstered its sales force, improved its software offering, and emphasized customer service. As a result, it has started to take new business and expand its presence in new geographies. It has been hitting a Rule-of-40 growth target for the past several quarters.
Sylogist stock is up 18% in 2024. However, if it can continue to execute its strategy, it could enjoy considerable upside as the stock valuation re-rates closer to peers.
A diversified industrial stock set for a re-rating
Another growth stock that could really tick up higher in 2024 is Calian Group (TSX: CGY). So far, this company has not performed well in 2024. Its stock is down 5% this year. However, that may be where the opportunity is.
Calian operates a mix of businesses in healthcare, training/planning, satellite and nuclear technologies, and cybersecurity. In the past five years, Calian has grown revenues by a 17% compound annual growth rate (CAGR). Earnings before interest, tax, depreciation, and amortization (EBITDA) has risen by a 24% CAGR.
Last year, its results missed expectations. However, it is guiding for +27% EBITDA growth in 2024, so it may be set for a catch-up. Calian stock only trades with an enterprise value-to-EBITDA ratio of eight, so it could definitely surge if it hits its numbers.
A financial winner that should keep winning
The last stock set to skyrocket has been a perennial strong performer. goeasy (TSX: GSY) has grown to become one of Canada’s top non-prime lenders.
With the economy weakening and interest rates rising, the big Canadian banks are tightening their lending policies. As a result, more near-prime customers are being pushed into goeasy’s lending spectrum.
The company has done a great job expanding its loan portfolio by expanding its markets and products. It just announced the addition of a credit card product. That could significantly expand its total addressable market.
This growth stock is up 270% in the past five years. It is up 20% this year. However, it still only trades for 11 times forward earnings. That is still a bargain, given the strong growth prospects for this business.
