Mid-cap stocks are excellent additions to your portfolio. They offer higher growth prospects than large-cap stocks while being less risky than small-cap stocks. Against this backdrop, let’s look at the following three top Canadian mid-cap stocks that are ideal additions to your portfolios now.
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goeasy
Since beginning its consumer lending business in 2006, goeasy (TSX: GSY) took around 13 years to reach $1 billion in consumer loan portfolio. However, the company has more than quadrupled its loan portfolio to $4.39 billion since then. Amid the expanding loan portfolio, its revenue and diluted EPS (earnings per share) have grown at an annualized rate of 28.7% and 20.1% over the last five years.
Despite the solid growth, goeasy has acquired a small percentage of the Canadian subprime market, thus offering a substantial scope for expansion. The company also raised around $700 million by issuing senior unsecured notes, thus strengthening its total funding capacity. Also, its comprehensive product range, multiple distribution channels, and geographical expansion could continue to expand its loan portfolio. It has adopted next-gen credit models and tightened underwriting requirements, which could lower delinquencies and improve profitability.
Moreover, goeasy has rewarded its shareholders by raising its dividends at 30% CAGR (compound annual growth rate) for the last 10 years, while its forward yield currently stands at 2.75%. Considering all these factors, I believe goeasy would be an excellent buy.
Docebo
Another midcap stock I am bullish on is Docebo (TSX: DCBO), which offers an end-to-end learning platform to organizations worldwide. Last month, it reported an impressive third-quarter performance, with its top line growing by 19% to $55.4 million. The net addition of 266 customers over the last four quarters and a 9.8% increase in its average contract value drove its sales. Supported by top-line growth, the company grew its adjusted net income by 66% to $8.3 million.
Meanwhile, analysts project the LMS (learning management systems) market to grow in double-digits for the rest of this decade. Given its highly customizable platform and introduction of artificial intelligence-powered tools, the company could continue to expand its market share in the coming quarters. So, I expect the uptrend in Docebo’s financials and stock price to continue.
Lightspeed Commerce
My final pick is Lightspeed Commerce (TSX: LSPD), which has been under pressure this week, losing 9.5% of its stock value. On Monday, the company announced it would slash 200 jobs amid its reorganization initiative to optimize its operations. It also added that it would incur most of the restructuring charges in the third quarter of fiscal 2025. So, investors are worried that the reorganization charges could hurt its profitability, thus leading to a correction.
Meanwhile, the selloff has created an excellent buying opportunity for long-term customers in Lightspeed due to its solid growth prospects. The secular shift towards an omnichannel selling model has created a multi-year growth potential for the company. The company continues to launch innovative products, focusing on North American retail and EMEA (Europe, the Middle East, and Africa) hospitality sectors. Besides, its unified POS (point-of-sales) and Payments offering has expanded the adoption of its Payments platform, thus driving its GPV (gross payment volume) and financials.
Along with these growth initiatives, Lightspeed has adopted several cost-cutting initiatives, which could boost its profitability. Despite these growth prospects, the company trades 2.2 times analysts’ projected sales for the next four quarters, making it an excellent buy.
