Investing in quality growth stocks is a proven strategy to create significant wealth over time. While equity indices are near all-time highs, several growth stocks trade below record levels, allowing you to buy the dip and benefit from outsized gains when market sentiment recovers. Here are two such TSX growth stocks you can buy in 2024.
Propel Holdings stock
Valued at $760 million by market cap, Propel Holdings (TSX: PRL) is a fintech company. Its operating brands include For a Credit, CreditFresh, and MoneyKey, which are Propel’s lending-as-a-service product line facilitating access to credit for consumers underserved by legacy financial institutions.
According to Propel, its robust artificial intelligence-powered platform can evaluate customers in a more comprehensive manner compared to traditional credit scores. With operations in more than 30 states and provinces across North America, Propel’s total loan originations have already totalled US$1.4 billion since its inception. In this period, it has facilitated over one million loans and lines of credit.
Since 2019, Propel has increased revenue by 47% annually while adjusted net income has more than doubled each year, which is exceptional for a company part of a cyclical industry. The growth story for Propel Holdings is far from over, given the global fintech lending market is valued at $1 trillion. Moreover, it estimates the number of underserved customers in North America at 70 million.
In the first quarter (Q1) of 2024, propel Holdings reported revenue of US$96.5 million, an increase of 47% year over year. Its adjusted net income rose by 84% to US$15.3 million, or US$0.41 per share. In addition to steady revenue and earnings growth, Propel also pays shareholders a quarterly dividend of $0.13 per share, up from $0.095 per share in November 2021.
Down 21% from all-time highs, the TSX growth stock trades at 11 times forward earnings, which is really cheap. Analysts remain bullish and expect Propel stock to surge over 40% in the next 12 months.
Payfare stock
Valued at $290 million by market cap, Payfare (TSX: PAY) trades 55% below all-time highs. Payfare also operates in the fintech space and is an earned wage access company that provides instant access to earnings and digital banking solutions for the gig workforce.
In Q1 of 2024, it reported revenue of $51.9 million, up 23% year over year. Its gross dollar value, which is the total amount of payments processed on its platform, stood at $3.5 billion. Payfare ended Q1 with 1.4 million active users, up 26% from the year-ago period.
Unlike other fintech companies, Payfare reports a consistent profit. In Q1, its adjusted earnings before interest, tax, depreciation, and amortization stood at $6 million, up 98% year over year. However, its free cash flow fell to $5.8 million from $6.5 million in the last 12 months as Payfare continued to invest in new growth opportunities.
Analysts expect Payfare to more than double earnings per share to $0.63 in 2024. So, priced at 9.7 times forward earnings, Payfare is really cheap and trades at a discount of 77% to consensus price target estimates in June 2024.
