The TSX has shown strength over the past year, reflecting the economy’s resilience and investors’ optimism surrounding artificial intelligence (AI) technology and anticipated rate cuts. While several Canadian stocks posted solid gains, shares of a select few fundamentally strong companies continue to trade cheap on the valuation front, making them compelling investments near the current levels.
So, for investors looking to buy cheap growth stocks for $3,000, here are my top three picks.
goeasy
goeasy (TSX: GSY) stock has gained over 65% in one year. Despite this notable increase in its value, goeasy stock trades cheap on the valuation metric. For instance, goeasy stock is trading at the next 12-month price-to-earnings (P/E) multiple of 11.1, which is lower than its historical average. Moreover, it is attractive considering the company’s high earnings growth rate of over 30% and a dividend yield of 2.3%.
It’s worth noting that goeasy’s earnings per share (EPS) have grown at an average annualized growth rate of 30.02% in the last five years.
The company is a leader in Canada’s subprime lending market. Its omnichannel offerings, geographical expansion, diversified funding sources, and wide product range position it well to capitalize on the large non-prime lending market.
Further, this financial services company is witnessing solid momentum across unsecured lending and automotive financing. This will drive its loan portfolio and revenues in the coming quarters. Higher revenue, steady payments and credit performance, and productivity savings will likely drive its future earnings and share price.
Besides solid capital gains, this growth stock will likely enhance its shareholders’ return through higher dividend payments. In summary, goeasy is a solid stock offering value, income, and growth.
Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) offers a platform to support omnichannel commerce. Its stock is down about 33% year to date on fears of a slowdown in e-commerce growth and economic uncertainty. Given this decline, shares of Lightspeed are trading near their 52-week low. However, the technology company’s fundamentals remain strong, making it a compelling investment near its current market price.
Notably, Lightspeed stock is trading at a forward enterprise value/sales (EV/sales) multiple of 1.2, which is near an all-time low. At the same time, the company is growing its revenue at a solid double-digit rate while its gross transaction volume, gross payment volume, and average revenue per user (ARPU) are showing strength. These attributes make Lightspeed a solid growth stock trading cheap.
Lightspeed is poised to benefit from the ongoing shift in selling models towards multi-channel platforms. Further, the demand for its products will rise as businesses increase their tech spending to upgrade their traditional payment systems.
Lightspeed is focusing on high-value customers, which augurs well for growth as it will enhance its ARPU and lower churn. Further, its accretive acquisitions will likely accelerate its growth rate. The company is cutting costs and heading towards profitability, which is positive and will likely boost its share price.
WELL Health
WELL Health (TSX: WELL), a provider of digital healthcare services, could be a solid addition to your growth stock portfolio. WELL Health consistently grows its revenue at a healthy pace and focuses on delivering profitable growth. While the company is growing rapidly, its stock is trading cheaply.
WELL Health stock is trading at a forward EV/sales multiple of 1.7, which is well below its historical average. WELL’s solid growth prospects and low valuation provide a good opportunity to invest in this Canadian growth stock.
WELL Health’s business could continue to grow rapidly due to its ability to drive higher omnichannel patient visits. Additionally, strategic acquisitions further enhance its growth prospects by broadening its product offerings and market presence. Also, the company prioritizes investment in capital-efficient growth opportunities, reducing costs and cutting debt. All these efforts will likely support its sales and earnings and, in turn, its share price.
