Growth stocks will have the potential to grow their financials faster than the industry average, thus delivering higher returns in the long run. These companies usually don’t pay dividends as they reinvest their profits to grow their businesses, enhancing shareholders’ value in the long run. Due to their higher return potential, growth stocks trade at higher valuations. Also, the developing nature of their businesses makes them riskier. Meanwhile, here are three under-$25 growth stocks that you can buy now to reap superior returns in the long run.
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WELL Health Technologies
WELL Health Technologies (TSX: WELL) is a digital healthcare company that empowers healthcare professionals to deliver positive patient outcomes. The growing usage of software solutions in the healthcare sector, digitization of patient records, and growth in the adoption of virtual healthcare services have created long-term growth potential for the company. It also invests in artificial intelligence (AI) to develop innovative products that could aid healthcare professionals and enhance patient experiences.
Moreover, WELL Health is continuing its expansion initiatives and has acquired seven assets since December. These acquisitions could add around $100 million of revenue annually while generating an EBITDA (earnings before interest, tax, depreciation, and amortization) margin in line with the company’s guidance. The company also has another 12 letters of intent that could add another $65 million to its top line annually.
Besides, WELL Health is working on spinning out WELLSTAR Technologies, a pure-play SaaS (Software-as-a-Service) company that offers high-quality technology and services to around 37,000 healthcare providers. The company expects to complete the spinoff by the end of this year, allowing investors an ideal opportunity to invest in a pure healthcare technology company. Considering its growth prospects, I expect the uptrend in WELL Health’s financials and stock price to continue.
Savaria
Second on my list would be Savaria (TSX: SIS), which offers accessibility solutions to physically challenged people. It designs, manufactures, and markets a comprehensive range of accessibility solutions. Its geographically spread manufacturing facilities and solid dealer network allow it to sell its products worldwide.
The aging population and growing income levels are driving the demand for accessibility solutions, thus expanding the addressable market for Savaria. Amid demand growth, the company continues with its “Savaria One,” a multi-year program focusing on new product development, improving operating efficiency and throughput, and expanding its market share. Further, the company is also working on acquisitions that could boost its financials in the coming quarters. Amid these growth initiatives, Savaria’s management expects its 2025 top line to be around $1 billion while improving its adjusted EBITDA margin to 20%.
Despite its healthy growth prospects, Savaria trades at 1.6 times analysts’ projected sales for the next four quarters, making it an excellent buy at these levels.
Lightspeed Commerce
The increased adoption of multi-channel selling has created long-term growth potential for Lightspeed Commerce (TSX: LSPD), which offers commerce solutions to businesses worldwide. Despite challenging market conditions, the company continues to grow its GTV (gross transaction value) and GPV (gross payment volume). New innovative product launches, growing traction for its unified POS and payments offerings, and an increased shift towards higher GTV customer locations could drive its financial growth.
Besides, Lightspeed is continuing its reorganization initiatives to optimize its operations and improve profitability. Despite these initiatives, the company has been under pressure over the last few months and trades at a 21% discount compared to its 52-week high. Also, its next-12-month price-to-sales multiple has declined to an attractive 1.9. Considering all these factors, I believe Lightspeed would be an excellent buy right now.
