Growth investing is one of the profitable stock-buying strategies. Capital gains or price appreciation is the primary focus, and growth stocks with visible strong upside potential are the investment choices. The TSX has several multi-bagger candidates, but there are two price-friendly if not ridiculously cheap options right now.
Payfare (TSX: PAY) and Healwell AI (TSX: AIDX) could soar higher than their current share prices in their respective sectors. The former caters to a fast-growing next-generation workforce, while the latter aims to deliver accurate diagnoses and treatment plans in the healthcare sector.
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Financial technology
Payfare empowers next-generation workers in the gig economy. The $357.7 million financial technology company’s platform provides gig workers mobile banking and instant payment solutions, including loyalty rewards.
Further, the fintech partners with leading gig platforms like DoorDash, Lyft, and Uber to optimize worker payouts. The current share price is $7.35 (+18.4% year-to-date), while market analysts’ 12-month average price target is $11.33 (+54.2%).
The business is thriving, as evidenced by Payfare’s latest quarterly results. In the three months ending June 30, 2024, revenue increased 20.4% year-over-year to a record $56 million. Net income climbed 131.6% to $4.9 million versus Q2 2024. For the first half of the year, profits ballooned 194% to $10 million from a year ago.
According to management, Payfare generates approximately 70% to 80% of its revenue from network interchange fees collected from payment networks. The rest, or 20% to 30%, are from user banking fees such as ATM withdrawals, money transfers, and foreign exchange.
Payfare also incurs little or no marketing costs since gig platforms initiate invitations to gig workers or market Payfare’s products and services. From Q1 2021, active users have grown exponentially from 146,842 to 1,468,770 in Q2 2024 (900.24%).
The fintech funds its growth objectives using internally generated free cash flow (FCF). At the quarter’s end, the $9.6 million FCF is 4,700% higher than the same period in 2023. Notably, Payfare has zero debt. Management added that the sixth-consecutive earnings-positive quarter in Q2 2024 indicates consistent profitability.
In early March this year, Uber announced the launch of the Uber Pro Card in Canada in partnership with Payfare and Mastercard. On July 25, 2024, Payfare signed a long-term contract extension with Lyft to ensure continued collaboration and future product enhancements.
Healthcare technology
Healwell AI continues to deliver astronomical returns in 2024. At only $1.93 per share, current investors enjoy a 157.3% year-to-date gain. Had you invested $5,000 on year-end 2023, your money would be $12,866.67 today. Market analysts recommend a strong buy rating and forecast a 91.2% upside in one year.
The $322.6 million healthcare technology company believes that artificial intelligence (AI) can help make healthcare more predictive and proactive. Healwell uses AI to analyze big data and develop improved preventive care recommendations for patients.
Because of organic growth, strategic mergers, and a robust acquisition pipeline, Dr. Alexander Dobranowski, CEO of Healwell, expects the current $20 million plus revenue to soon exceed $40 million annually.
Strong buys
Payfare and Healwell AI are buying opportunities for their low prices vis-à-vis their visible and enormous high-growth potential.
