Prior to the Bank of Canada’s rate cut announcement on June 5, 2024, many Canadian stocks had been outperforming. But with an improved market environment, expect WELL Health Technologies (TSX: WELL), Payfare (TSX: PAY), and Baytex Energy (TSX: BTE) to break out. The three growth stocks are poised to deliver abundant returns by 2025.
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Screaming buy
WELL Health is a screaming buy since reporting impressive financial performance for Q1 2024. The $1 billion digital healthcare company is practitioner-focused and provides omnichannel patient services, including electronic medical records (EMR). It is the largest owner and operator of outpatient clinics in Canada.
In the three months ended March 31, 2024, revenue rose 37% year over year to $231.6 million, while net income reached $15.1 million compared to the $14.4 million net loss in Q1 2023. Both results are new records for the company. Notably, the $19.1 million cash flow from operations will enable WELL to fund its organic growth and pursue acquisition plans.
Hamed Shahbazi, WELL founder and CEO, said the quarterly results exceeded all expectations and showcased robust and efficient technology-driven care delivery platforms. He expects the strong performance to sustain for the rest of 2024 as the company optimizes its operations and profitability. If you invest today, the share price is $4.19 (+8.8% year to date).
Flourishing gig economy
Payfare caters to next-generation workers and helps the gig economy flourish. The $309.7 million global financial technology company provides mobile banking, instant payment, and loyalty-reward solutions to the gig workforce and partners with e-commerce marketplaces and gig platforms like DoorDash, Lyft, and Uber.
In Q1 2024, revenue climbed 23% year over year to a record $51.9 million, while net income soared 296% to $5.1 million compared to Q1 2023. Payfare also launched new programs and finance products, and entered a strategic commercial agreement with Automatic Data Processing to offer Earned Wage Access (EWA) to the Canadian market.
Scoop the stock while the price is only $6.25 (+0.6% year to date). Based on market analysts’ 12-month average and high price targets, the upside potential is between 70.7% ($10.67) and 108% ($13).
Strong cash flow profile
Baytex Energy deserves serious consideration for its relatively cheap price ($4.64) and market-beating return (+6.5% year to date). This mid-cap energy stock is far from mediocre, given the 118.9% overall return in 3 years. It also pays a modest 1.9% dividend.
The $3.9 billion energy company is an oil and natural gas producer operating in the Western Canadian Sedimentary Basin and Eagle Ford in the United States. In Q1 2024, net loss thinned 97.8% year over year to $14 million. Management also executed the company’s largest exploration and development program during the quarter.
Its President and CEO, Eric T. Greager, said Baytex boasts a strong financial position and cash flow profile. Management expects to generate around $700 million in free cash flow (FCF) in 2024. It intends to allocate FCF equally (50/50) to the balance sheet and shareholder returns.
Higher share prices
The S&P/TSX Composite Index recorded an all-time closing high of 22,468.20 on May 21 but did not post new records after the rate cut. However, I won’t be surprised if WELL Health Technologies, Payfare, and Baytex Energy share prices double next year.
