With the TSX Index rising by 14% in 2024, many stocks have enjoyed a strong run up. Interest rates have pulled back, and that has been favourable for many of Canada’s large dividend stocks (often referred to as bond proxies).
However, there are plenty of smaller companies that could provide even better returns over the longer term. Some of the most attractive opportunities are in the small- to mid-cap range ($500 million to $5 billion). If you are looking for some intriguing growth stocks to buy, here are three to look at adding before September ends.
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An up-and-coming insurance stock
With a market cap of $2.07 billion, Trisura Group (TSX: TSU) is one of the smallest listed insurance companies in Canada. Despite its size, it has been one of the best-performing companies on the TSX over the past five years. Its stock is up 488% in that time!
Trisura provides specialized insurance products in Canada. However, it has been gaining traction deploying those products in the United States. It also has a re-insurance fronting business that has been providing nice returns. Its niche underwriting allows it to earn above-average returns on equity.
This stock is a little higher risk, but it is also higher reward. Last year, it had a large program write-down that hit the bottom line (and the stock). Fortunately, that appears behind it.
Hopefully, management has learned from its mistakes. While growth has moderated, the company still has a large runway to expand its insurance mix across North America.
Trisura trades at a fraction of other specialized insurance providers in the United States. As it continues to expand, its valuation should rerate as its earnings start to rise. Investors could see nice upside in the coming years.
A top financial stock for income and growth
Another mid-cap to look at here is goeasy (TSX: GSY). It’s a top financial stock for income, growth, and value. It has a market cap of $3 billion. Its stock is up 206% in the past five years.
goeasy has grown to become the dominant non-prime lender in Canada. It has a retail network that extends across the country. This gives it an established presence and rapport with consumers.
While the economy has weakened, declining rates should be favourable as its lending spreads widen. goeasy has expanded its product mix into vehicle and recreational vehicle loans, as well as buy-now, pay-later loans.
It has been met with strong demand. It also plans to roll out credit card products in 2025. With a 2.5% yield and a high single-digit earnings multiple, its stock still looks attractive today.
A blue-chip with a great growth trajectory
TFI International (TSX: TFII) is a little bit larger, with a $16.7 billion market cap. However, it is a growth stock Canadians shouldn’t ignore. TFI is one of the largest trucking and freight companies in Canada. It also has a growing business in the United States.
TFI has all the aspects you want in a quality growth stock. It has a highly invested founder-led chief executive officer. It has a low-cost operating model that helps it earn market-leading returns on its invested capital. Lastly, it has a solid balance sheet that supports a steady stream of smart acquisitions.
TFI is not cheap, but it also is not expensive. The North American freight market has been challenged, but this stock could see upside when it (and earning-per-share growth) normalizes.
TFI stock is up 395% over the past five years. Yet, there is still attractive upside for patient shareholders in the years to come.
