The Canadian benchmark index has trended higher, driven by the rally in top TSX stocks. The economy’s resilience, easing inflation, interest rate cuts, and advancements in artificial intelligence (AI) have all boosted investors’ optimism and driven the stock market higher.
While the S&P/TSX Composite Index has risen nearly 26% over the past year, shares of a few fundamentally strong growth stocks are still trading ridiculously cheap, providing an excellent buying opportunity for long-term investors. These stocks have the potential to deliver stellar gains over time.
Against this backdrop, here are two ridiculously cheap growth stocks worth buying hand over fist in 2024.
WELL Health
Investors seeking cheap growth stocks should consider the shares of the leading omnichannel healthcare company WELL Health (TSX:WELL). Its stock is currently trading at the next 12-month (NTM) enterprise value-to-sales (EV/Sales) multiple of just 1.5, representing a significant discount compared to its historical average and close to a multi-year low.
Even though WELL Health stock is trading cheap, the company consistently delivers solid financials based on a highly predictable revenue base. Further, its ability to generate positive cash flows and earnings is positive.
Notably, WELL Health has recorded impressive revenue growth for 23 consecutive quarters, thanks to its extensive network of clinics. In fact, during the recent quarter, the company surpassed the $1 billion mark in annualized revenue run-rate, one quarter ahead of the previously expected plan. This reflects a rise in omnichannel patient visits and the acquisition of new clinics.
The company expects the rise in patient visits and acquisitions to fuel revenue and earnings growth. Further, its growing AI capabilities bode well for long-term growth.
The company is also focused on increasing profits and improving margins. WELL Health is expanding its service offerings, implementing cost-cutting measures, and exploring AI-powered healthcare innovations, all of which are likely to boost its bottom line. Additionally, WELL Health is actively making efforts to increase cash flow, repay debt, and enhance leverage. These initiatives will likely fund future acquisitions and help sustain long-term growth.
goeasy
goeasy (TSX:GSY), which provides lending services to subprime borrowers in Canada, is another high-growth stock that is extremely cheap. Shares of this financial services company are trading at a next-12-month price-to-earnings (P/E) ratio of 9.9, which is significantly low considering its potential to deliver earnings growth of more than 20%. In addition, the company also provides a dividend yield of 2.6%.
It’s worth noting that this subprime lender has outperformed the broader markets on returns by a considerable margin. goeasy ‘s outperformance is supported by its solid financials. For instance, its earnings per share (EPS) has increased at a compound annual growth rate (CAGR) of over 28.7% in the last five years, while its revenues increased at a CAGR of 20.1%. Further, it has consistently enhanced its shareholders’ value through higher dividend payments over the past decade.
The company’s dominance in the subprime lending market, omnichannel offerings, geographic expansion, and diversified funding sources are likely to drive its consumer loan portfolio, supporting higher revenues. Further, its steady credit performance and operational efficiency will likely drive its earnings, supporting higher dividend payments and the upward trajectory of its stock price.
