The Toronto Stock Exchange is on track to outperform this year and beat its 8.12% overall return in 2023. As of September 16, 2024, the year-to-date gain is 13.09%, with only communications services out of 11 primary sectors in negative territory. However, if you’re looking for potential multi-baggers, two artificial intelligence (AI) stocks are ideal options for Tax-Free Savings Account (TFSA) investors.
Celestica (TSX:CLS) is Canada’s counterpart to America’s AI king, NVIDIA. Propel Holdings (TSX:PRL) isn’t a chipmaker but a financial technology company with an AI-powered lending platform. Both growth stocks have market-beating returns, and the stock prices are likely to rise further.
Profitable business
Celestica has an overall return of 471.47% in the last three years compared to NVIDIA’s 423.61% within the same period. At $61.53 per share, the Canadian stock is up 61.53% year to date. Moreover, NVDA is more expensive at US$116.78.
The $7.44 billion American-Canadian electronics manufacturing services company is a leader in design, manufacturing, hardware platform and supply chain solutions. Celestica helps customers solve complex technology challenges and be more innovative.
Celestica’s business thrives due to favourable demand dynamics. In the first half of 2024, revenue increased 21.8% year over year to US$4.6 billion, while net earnings soared 151% to US$201.3 million from a year ago. The bottom line in the second quarter (Q2) of 2024 climbed 79.5% to US$99.6 million compared to Q2 2023. During the quarter, adjusted free cash flow (FCF) reached US$63.3 million.
According to its president and chief executive officer (CEO), Rob Mionis, it was another very strong quarterly performance. Management raised the 2024 full-year guidance and expects to end the year with $9.45 billion in revenue. “We continue to stay focused on solid execution for our customers and delivering on our strategic priorities and financial targets,” he added.
Celestica derives revenue and profit from two core business segments: two operating Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). ATS caters to aerospace & defence, industrial, health tech, and capital equipment business clients. CCS focuses on communications and enterprise (servers and storage) end markets.
Gavin Cato, Portfolio Solutions head and CCS chief technology officer, said, “Enterprises are generating, storing and analyzing increasing amounts of data, and relying on real-time analytics to make strategic decisions about their operations.” Celestica’s latest offering is its SC6100 storage controller.
The next-gen, 2U rackmount all-flash storage controller delivers increased performance and high availability for demanding enterprise application workloads.
Fast-rising fintech
Propel Holdings is flying high in 2024. At $27.27 per share, current investors enjoy a mouth-watering 114.01% year-to-date gain. An added charm is the decent 2.03% dividend. Had you invested $7,000 in PRL one year ago, your money would be three times more or $21,352.35 today. Market analysts recommend a buy rating for the AI stock. Their 12-month average price target is $32.82 (+20.35%).
The $937.35 million fintech facilitates credit products (installment loans and lines of credit through its proprietary online lending platform. Propel’s most recent quarterly results were mighty impressive. In Q2 2024, revenue and net income increased 49% and 95% to US$106.8 million and US$11.1 million, respectively.
Outsized gains
Celestica and Propel Holdings benefit from the AI hype. Both have delivered outsized gains and are well-positioned to become big winners in 2024.
