Investors already have several growth stocks on the TSX today on their radar. Yet, there are two growth stocks that are just starting to pick up steam. Ones that have started to climb after earnings and may not come back down.
So today, let’s look at why these two growth stocks are superior buys on the TSX today.
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Dollarama
Dollarama stock rose in share price after the release of its fourth-quarter and full-year earnings results. However, the company still continues to rise even months later. And now with earnings on the radar once more, it could be time to get in before the going gets good.
In particular, there were a few reasons for the share price increase. Dollarama stock achieved an 8.7% increase in comparable store sales in the fourth quarter and a 12.8% increase for the entire Fiscal 2024. This growth is substantial, particularly as it builds on the prior year’s strong performance.
What’s more, the company reported a 26.4% increase in diluted net EPS for the fourth quarter, reaching $1.15, and a 29% increase for the fiscal year, reaching $3.56. Such robust earnings growth is likely to attract investors and drive up the stock price. Dollarama stock’s sales increased by 16.1% to $5.9 billion for Fiscal 2024. Additionally, operating income grew by 25.5%, with an operating margin improvement from 23.6% to 25.5%.
Finally, we cannot forget a 29.9% increase in the quarterly dividend to $0.0920 per common share signals strong confidence in future cash flows and a commitment to returning value to shareholders. The guidance for Fiscal 2025 indicates continued strong performance with expected comparable store sales growth of 3.5% to 4.5% on top of the already high growth of the past two years. Maintaining strong gross margins and controlled SG&A expenses suggests continued profitability. All together, it’s a strong stock only getting stronger.
iA Financial
Then there’s growth stock iA Financial (TSX: IAG). The company rose in share price as well after earnings were announced for its first quarter and continues to climb. Yet according to the company, there is even more reason to continue holding, and indeed investing in, the stock.
There were a few takeaways from its recent earnings report. IAG reported a 17% year-over-year increase in core EPS, reaching $2.44. This indicates strong profitability and efficient operations. The trailing 12-month core ROE is 14.6%, close to the company’s medium-term target of 15%-plus, demonstrating solid returns on equity.
The financial services firm reported strong sales momentum, with an 11% year-over-year increase in assets under management and administration (AUM and AUA), and an 8% increase in premiums and deposits. This highlights the company’s successful business expansion and market penetration.
What’s more, the growth stock’s buyback program has been amended to increase the maximum number of common shares that may be repurchased and cancelled to 8%, reflecting the company’s confidence in its own value and commitment to returning capital to shareholders.
And, of course, there’s a dividend here as well. IAG paid a quarterly dividend of $0.82 per share and has approved the same amount for the next quarter, demonstrating a stable and reliable return to shareholders. So with strong earnings, and even stronger outlooks, these two growth stocks certainly look like stable stocks to consider for your growth portfolio.
