With inflation in the United States falling to 2.5% in August, investors hope the United States Federal Reserve will cut interest rates this month. Amid this anticipation, the S&P/TSX Composite Index is up and trading at a record high. With the improvement in investors’ sentiments, I am bullish on the following three top Canadian growth stocks.
Savaria
With its production facilities located in Canada, the United States, Mexico, Europe, and China; and global dealer network, Savaria (TSX: SIS) offers accessibility products and solutions worldwide. In the first six months, the company has posted revenue growth of 5.1% amid organic growth and favourable currency translations. Meanwhile, the divestment of its Norway operations has offset some of the growth.
Supported by its top-line growth and expansion in operating margins, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 26.7%. The adjusted EBITDA margin expanded by 300 basis points to 17.8%. The company’s financial position also looks healthy, with its net debt-to-adjusted EBITDA ratio at 1.9, an improvement from 2.1 at the end of last year.
Meanwhile, Savaria is investing in new product development and strengthening its production capabilities. Besides, its multi-year Savaria One initiative could boost production and throughput while improving its procurement and supply chain efficiencies. Considering its solid underlying business and healthy growth prospects, I am bullish on Savaria.
WELL Health Technologies
WELL Health Technologies (TSX: WELL) develops products and services that aid healthcare professionals in delivering positive patient outcomes. The growing adoption of telehealthcare services, digitization of patient records, and growing usage of software solutions in the healthcare industry have created multi-year growth potential for the company. Besides, the company continues to invest in artificial intelligence to develop innovative products and solutions that could expand its market share.
Moreover, the company continues to make strategic acquisitions and partnerships, which could expand its footprint. In June, it acquired 10 clinics in British Columbia and Ontario from Shoppers Drug Mart. Meanwhile, it has partnered with Microsoft to improve digital healthcare across North America. Along with these growth initiatives, its comprehensive cost-cutting program could boost its profitability. Despite its healthy growth prospects, WELL Health trades at a cheaper NTM (next 12 months) price-to-earnings multiple of 15.8, making it an attractive buy.
Docebo
Amid the rising speeds of telecommunication networks, development of innovative products, and growth in remote learning and working, the demand for LMS (learning management systems) is rising. Meanwhile, Grand View Research projects the global LMS market to grow at an annualized rate of 19.7% for the rest of this decade. So, I have picked Docebo (TSX: DCBO), which offers a highly configurable cloud-based learning platform, as my final pick.
The company also invests in artificial intelligence to develop new tools and features to enhance customer experiences. Besides, its growing customer base and increasing average contract value could support its financial growth. Also, around 81% of its customers have signed multi-year agreements, stabilizing their financials. Although DCBO stock has witnessed healthy buying over the last few months, it trades over 23% lower than its 52-week high. Given its higher growth prospects and discounted stock price, Docebo could deliver multi-fold returns in the long run.
