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.
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.
