For Canadian investors, keeping an eye on growth areas is key to staying ahead in the market. Growth stocks often outperform over time, and according to data from RBC, Canadian growth equities returned an impressive average of 8.7% annually over the past 10 years. Staying attuned to sectors with the potential for significant expansion allows investors to capture new opportunities and ride the wave of long-term gains. Thusly, growth-focused strategies can become especially rewarding. So, let’s look at some to consider as we creep towards the end of 2024.
Where to look
As 2024 heads into its final quarter, several areas of the market are ripe for a rebound. Tech stocks, which took a hit earlier in the year, are showing signs of recovery, particularly as artificial intelligence (AI), cloud computing, and cybersecurity continue to drive demand. Additionally, energy stocks are poised for a resurgence due to geopolitical factors and rising oil prices. Investors who were cautious earlier in the year might find this to be the perfect time to re-enter these sectors and benefit from the potential upswings.
Real estate investment trusts (REITs) are another sector due for a bounce-back. As interest rates stabilize, REITs under pressure from rising borrowing costs are likely to regain their footing. With the growing demand for residential and commercial spaces, REITs could offer both capital appreciation and reliable dividends. For investors looking to round out their portfolios, keeping an eye on these sectors as we move through the final quarter could be a smart move.
WELL stock
WELL Health Technologies (TSX:WELL) on the TSX is a fantastic option for those seeking a safe growth investment. Despite a slight stock price dip of 4.8% over the past year at writing, WELL boasts impressive earnings momentum. This includes quarterly revenue growth of 42.3% year-over-year. Its forward price/earnings (P/E) ratio of 14.1 suggests investors anticipate continued earnings growth. While a return on equity of 18.3% shows management’s ability to generate solid returns. “WELL Health is at the forefront of the digital healthcare revolution, positioning itself as a market leader in telehealth services,” according to one industry expert.
WELL’s solid financials further support its long-term growth potential. With a market cap of $1 billion and operating cash flow of $88.8 million, the company is well-positioned to continue expanding its services and increase its revenue base. Its relatively low debt-to-equity ratio of 41.6% adds to its stability. All considered, WELL is an attractive option for investors looking for a balance between growth and security in the fast-growing healthcare sector.
Descartes
Descartes Systems Group (TSX:DSG) is another solid choice for Canadian investors seeking stability and growth. With a 52-week stock price increase of 29.4%, DSG has demonstrated impressive earnings momentum. Quarterly earnings growth year-over-year is 23.4%, and its operating margin of 28.2% showcases the company’s efficiency in turning revenue into profit. A return on equity of 10.3% reflects the company’s solid management, making it a reliable choice for long-term investors.
With a market cap of $11.2 billion and very low debt levels, DSG is financially sound and continues to perform well in the software-as-a-service (SaaS) sector. As one analyst commented, “Descartes has positioned itself as a global leader in logistics technology, and its consistent growth is a testament to its strong business model and strategic acquisitions.” Investors looking for a tech stock with steady growth potential should seriously consider DSG as a core part of their portfolio.
Foolish takeaway
Altogether, keeping an eye on growth areas like tech, energy, and REITs, and investing in strong companies like WELL and DSG, can be a winning strategy for Canadian investors. With solid earnings momentum and market potential, these stocks provide a great mix of growth and stability, making them ideal choices for those looking to ride the wave of market rebounds in 2024!
