If you are young and have higher risk-taking abilities, investing in growth stocks for the long term could be a worthwhile strategy. These companies possess the potential to grow their financials above the industry average, thus delivering superior returns in the long run. Given their high-return potential, these companies trade at expensive valuations, making them riskier.
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Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) serves retail, hospitality, and golf businesses by providing omnichannel commerce solutions that help them scale and enhance customer experiences. With enterprises adopting an omnichannel-selling model, the demand for the company’s products and solutions is rising. Meanwhile, the company is developing new products that would suit the growing needs of its customers, thus expanding its customer base and average revenue per customer (ARPU).
Further, Lightspeed’s unified POS (point of sale) and payments offering has increased the adoption of its payment platform, with its GPV (gross processing value) rising by 74% to $6.6 billion in the March-ending quarter. Amid the expanding addressable market and growing customer base and ARPU, I expect the uptrend in the company’s financials to continue. Further, its cost-cutting initiatives could improve its profitability in the coming quarters.
Meanwhile, Lightspeed’s management projects its top line to grow by 20% in fiscal 2025 while its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) could rise above $40 million. Given these growth prospects and attractive NTM (next 12 months) price-to-sales multiple of 1.9, Lightspeed would be an attractive buy.
Savaria
Savaria (TSX: SIS) designs, manufactures and distributes accessibility solutions to physically challenged persons worldwide. The company has delivered impressive returns of 19.2% this year amid solid first-quarter performance and healthy growth prospects. In the March-ending quarter, the company’s organic growth stood at 2.6%, while its adjusted EBITDA increased by 11.1%. Besides, its adjusted EBITDA margin expanded by 190 basis points to 16.6%.
The accessibility and patient care market is growing due to the aging population and rising income levels. Meanwhile, the company has adopted the ‘Savaria One’ initiative, focusing on market share growth, price optimization, and product innovation. It is also working on improving operational efficiency and production capacity while streamlining its procurement and supply chain to improve efficiency. Amid these initiatives, Savaria’s management is optimistic about posting revenue of $1 billion and an adjusted EBITDA margin of 20% in 2025.
Besides, Savaria pays a monthly dividend, with its forward yield currently at 2.9%, and trades at 1.4 times its projected sales for the next four quarters. So, I believe Savaria would be an excellent long-term buy.
Docebo
My final pick would be Docebo (TSX: DCBO), which offers corporate e-learning solutions to enterprises worldwide. Although the company reported an impressive first-quarter performance last month, it has since been under pressure, losing around 20% of its stock value. Investors are skeptical that a challenging macro environment could lower their IT spending, thus contracting the addressable market for Docebo.
However, I believe the pullback offers an appealing entry point for long-term investors. The growth in remote working and learning has prompted many companies to include e-learning modules in their strategies. Besides, Docebo is investing in AI (artificial intelligence) to enhance its product features, which could continue to drive its customer base. Further, the company has multi-year agreements with its clients and a higher net dollar retention rate, stabilizing its financials.
