3 Canadian Growth Stocks to Buy for Long-Term Returns

These three growth stocks may be down now, but don’t count them out, especially for long-term growth.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published January 15, 2025 4:00 pm EST

| More on: GSYLSPDWELL

Investing in the Canadian stock market can often feel like walking a well-trodden path. Everyone seems to talk about the big banks, telecom giants, and energy powerhouses. But for those willing to venture off the beaten track, there are some hidden gems with significant growth potential that very few investors consider. Today, I’ll share three Canadian growth stocks that are poised for long-term success. These aren’t the ones dominating headlines, but they might just dominate your portfolio returns.

person on phone leaning against outside wall with scenic view at airbnb rental property — Source: Getty Images

goeasy

Let’s begin with goeasy (TSX:GSY). While many may not know this name, goeasy has been quietly excelling in the financial services industry. Specializing in non-prime leasing and lending through its easyhome and easyfinancial brands, the growth stock targets an underserved market, helping Canadians with less-than-stellar credit get access to loans and leases.

In its most recent quarterly earnings, goeasy reported a year-over-year revenue increase of 15.4% – a strong indicator of its ability to grow even during challenging economic periods. The growth stock currently trades at a forward price-to-earnings ratio of just 9.3, suggesting it’s undervalued relative to its growth potential.

Plus, goeasy rewards investors with a solid dividend yield of around 2.6%, which has consistently grown over the years. Looking ahead, the growth stock is pursuing geographic expansion and launching new financial products, setting the stage for continued growth. This stock is a blend of growth and stability, a rare find in today’s market.

WELL

Next on our list is WELL Health Technologies (TSX:WELL), a pioneer in Canada’s growing digital health sector. WELL Health is best known for its innovative approach to telehealth services, connecting patients with healthcare providers through virtual platforms. Its network of physical clinics complements its digital offerings, creating a hybrid model that’s difficult to replicate.

The growth stock has been on a relentless growth trajectory, driven by increasing demand for virtual care, particularly since the pandemic. Recent earnings showed strong organic sales growth and profitability, a testament to WELL’s efficient operations.

What’s particularly exciting about WELL Health is its aggressive acquisition strategy. By acquiring smaller digital health companies and integrating them into its ecosystem, WELL is steadily building a healthcare empire. Despite its promising future, the stock is trading at a next-12-month enterprise value-to-sales ratio of just 1.6, near its all-time low, indicating that the market may not yet fully appreciate its potential.

Lightspeed

The final pick is Lightspeed Commerce (TSX:LSPD), a cloud-based commerce platform catering primarily to small and medium-sized businesses. Lightspeed helps businesses streamline their operations, manage transactions, and deliver better customer experiences.

The growth stock has faced its share of challenges, including a market sell-off that affected many tech stocks, but it has remained focused on delivering value to its customers and shareholders. In its latest quarterly earnings, Lightspeed reported a revenue decline of 8.6% year-over-year. This might have contributed to its current undervaluation. However, with a forward price-to-earnings ratio of 9.5, this stock appears to have significant upside potential.

Lightspeed’s strategic pivot toward high gross transaction volume customers and its emphasis on sustainable earnings growth are encouraging signs for the future. While it’s been overshadowed by larger tech names, Lightspeed is quietly positioning itself as a leader in the e-commerce space.

Bottom line

Of course, no investment is without risk. First, goeasy operates in a highly regulated financial sector, which could pose challenges. WELL Health is in a competitive and rapidly evolving industry, and Lightspeed faces the usual volatility associated with tech stocks. However, these risks are balanced by the companies’ strong management teams, innovative strategies, and market opportunities.

In conclusion, these three Canadian growth stocks offer a mix of undervaluation, strong financials, and long-term potential that make each worth considering. They might not be the first names that come to mind, but sometimes, the best opportunities are the ones hiding in plain sight. As always, do your due diligence, and remember that patience is key when investing in growth stocks.