Growth stocks aim to grow their financials at a superior rate than the industry average, thus delivering higher returns in the long run. Given their higher return potential, investors will be ready to pay premiums, increasing their valuations. Though these companies are susceptible to market fluctuations, making them riskier.
Despite the strong recovery in the broader equity markets, the following three growth stocks are still trading at a steep discount compared to their 52-week high, making them excellent buys.
Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) offers commerce solutions to small- and medium-scale businesses, which unify their offline and online operations and support multichannel sales, expansions, and various payment options. Despite its healthy performance in the March-ending quarter, the company has been under pressure due to management’s cautious outlook amid an uncertain global economy. LSPD has lost around 37% of its stock value compared to its 52-week high, while its NTM (next 12 months) price-to-sales multiple has fallen to an attractive 1.8.
Meanwhile, the adoption of the omnichannel selling model has created long-term growth potential. Besides, the company’s innovative product launches, geographical expansion, and unified POS and payment offerings could continue expanding its customer base and driving ARPU (average revenue per user). Along with these growth initiatives, the company has reorganized its operations, eliminating 10% of its workforce. It is also exploring other cost-cutting initiatives to boost its profitability.
Considering its discounted stock price, improving financials, and healthy growth prospects, Lightspeed Commerce would be an enticing buy at these levels.
BlackBerry
BlackBerry (TSX: BB) provides intelligent security software and services to blue-chip companies and governments worldwide. It reported impressive first-quarter earnings for fiscal 2025 last month, beating its guidance. Amid its strong performance, the company’s stock price has increased by 9.5% since its earnings on June 26. Despite the recent increase, it still trades at an over 57% discount compared to its 52-week high. Besides, its valuation also looks reasonable, with the company currently trading 2.3 times its projected sales for the next four quarters.
Meanwhile, the growth in software-defined vehicles has increased BlackBerry’s penetration. Despite recent weakness, the EV (electric vehicle) segment also offers strong long-term growth potential. BlackBerry also had several design wins during the May-ending quarter, which could boost its financials in the coming years. Further, the company is scaling its professional service team, which could support its clients’ development programs.
Its artificial intelligence-powered products in the cyber security segment have raised customer satisfaction levels and boosted renewals in government and financial services segments. So, the company’s long-term growth looks healthy, thus making it an ideal buy at these levels for investors with a longer horizon.
Docebo
Third on my list would be Docebo (TSX: DCBO), which has lost over 30% of its stock value compared to its 52-week high. The lower-than-expected 2024 guidance and investors’ fear that companies could lower their IT spending amid the challenging macro environment has led to a sell-off. Meanwhile, Grand View Research predicts that the learning management systems (LMS) market will grow at an annualized rate of 19.5% for the rest of this decade, thus expanding the addressable market for the cloud-based learning platform provider.
Moreover, Docebo’s acquisition of Edugo and partnership with Google Cloud have strengthened its artificial intelligence capabilities, which could expand its customer base and average ARPU. Besides, the company’s multi-year client agreements and higher net dollar retention rate would stabilize its financials. Given its healthy long-term growth potential and discounted stock price, I am bullish on Docebo.
