One way Canadians could potentially get richer is by investing their money in stocks with underlying businesses that have above-average growth prospects. Here are a couple of stocks that are expected to have relatively high growth. Additionally, these stocks are estimated to trade at good valuations. So, they have a fair chance of making investors richer by 2025.
Notably, though, because of the relatively small size of the companies, their stock prices could move up or down by good news and bad news, respectively. Therefore, investors should size their positions accordingly based on their risk tolerance and the size of their diversified portfolios.
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Payfare
Payfare (TSX: PAY) is a small-cap stock that has high growth potential. Analysts are currently projecting earnings-per-share growth of north of 20% each year over the next couple of years. However, even with a jump of about 30% over the last two weeks or so, the stock still trades at a very palatable forward price-to-earnings ratio (P/E) of about 13.6.
PAY one-year stock price change data by YCharts
To be sure, small-cap stock price movements can be highly unpredictable, as they are swayed more easily by news – good or bad. For example, as shown in the graph above, over the last 12 months, the stock is up roughly 26%, but there were ups and downs in between.
Payfare is a global financial technology company that offers digital banking, instant payment, and loyalty reward solutions for the gig economy workforce, including independent contractors and freelance workers who provide goods or services to consumers and businesses.
Yahoo Finance indicates that for the six analysts who cover the growth stock, the low and average price targets are $9 and $11, respectively, which represent upside potential of about 14% to 39% from the recent quotation of $7.91. If this target range materializes over the next 12 months, a $1,000 investment will turn into about $1,140 to $1,390.
The company will be reporting its second-quarter (Q2) results after the market closes on August 7. Interested investors could wait until than for the latest updates in the business.
Trisura
Trisura (TSX: TSU) is another stock with above-average growth potential. Analysts are currently projecting earnings growth of at least 15% each year over the next two years. Over the last few years, the stock has been stuck between a trading range of about $30 to $47.50 per share.
Currently, the stock trades near the high end of the range, as it has climbed approximately 37% over the last 12 months. That said, at the recent price of $46.18 per share, it still trades at a reasonable forward P/E of about 16.9.
TSU one-year stock price change data by YCharts
In fact, the eight analysts who cover the growth stock have low and average price targets of $52 and $58.25, respectively, which represent upside potential of about 13% to 26%. If this target range were to materialize over the next 12 months, an initial investment of $1,000 would turn into about $1,130 to $1,260.
Trisura is a specialty insurance company that has business lines operating in surety, risk solutions, and corporate insurance, and fronting. The insurer has a strong underwriting track record in Canada.
The company will be reporting its Q2 results after the market closes today. This provides a good opportunity for investors to review its recent results and outlook before making a decision.
