The Canadian equity markets have witnessed a healthy recovery over the last few days, with the S&P/TSX Composite Index rising 3.3% from this month’s lows. Amid improving investors’ sentiments, investors could consider accumulating the following three stocks, which have reported impressive fourth-quarter performances and offer healthy growth prospects.
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Shopify
Last month, Shopify (TSX:SHOP) reported an impressive fourth-quarter performance, with its GMV (gross merchandise volume) growing by 26% to $94.5 billion. Its expanding customer base, new product launches, and impressive performance from its B2B (business-to-business) segment boosted its sales, driving its GMV. Its top line also grew 31% to $2.8 billion amid GMV growth, rising payment solution penetration, and higher revenue from its subscription solutions amid new customer acquisitions. It was the company’s seventh consecutive quarter of above 25% revenue growth.
Amid operating leverage and lower G&A (general and administrative) expenses, Shopify’s operating income margin expanded from 13.5% to 16.5%. The company that offers various commerce solutions has also grown its free cash flow by 31% to $611 million while increasing its free cash flow margin from 21% to 22%.
Meanwhile, more enterprises are taking their businesses online, thus creating a long-term growth potential for Shopify. The company is also expanding its R&D (research and development) team to develop innovative products and services. It is also working on increasing the penetration of its payment solutions, which could support its financial growth in the coming years. Amid these growth initiatives, I expect the uptrend in Shopify’s financials to continue, thus delivering superior returns in the long term.
Celestica
Second on my list is Celestica (TSX:CLS), which has reported a solid fourth-quarter performance, with its adjusted EPS (earnings per share) outperforming the guidance. The company’s top line grew 19% to $2.55 billion amid a 30% growth in its CCS (Connectivity & Cloud Solutions) segment. Meanwhile, the revenue growth from its ATS (Advanced Technology Solutions) segment remained flat. Supported by operating leverage in its CCS segment, the company’s adjusted operating margin expanded from 6% to 6.8%. Amid top-line growth, margin expansion, and repurchasing of 0.3 million shares, its adjusted EPS grew 44.2% to $1.11.
Despite strong growth for the past few years, Celestica’s growth trajectory remains robust amid rising investments in building artificial intelligence-ready infrastructure, creating a massive demand for its networking and storage products. Also, the company is developing innovative products to meet the growing needs of its customers, supporting its growth prospects. Amid its solid fourth-quarter performance and healthy growth prospects, the company has raised its 2025 guidance, with its revenue and adjusted EPS projected to grow by 10.9% and 22.4%, respectively. Considering its growth initiatives and favourable market conditions, I am bullish on Celestica.
goeasy
I have picked goeasy (TSX:GSY) as my final pick. The subprime lender generated $814 million of loan origination in the fourth quarter of 2024, expanding its loan portfolio to $4.60 billion. The company witnessed solid performances across various product and acquisition channels amid rising credit demand, driving its loan originations. Meanwhile, its top line grew 20% to $405 million, while its adjusted operating margin stood flat at 41.6%. The company has posted a record adjusted EPS of $4.45 during the quarter, representing an 11% year-over-year growth.
Moreover, goeasy’s expanding product offerings, the addition of new distribution channels, enhancing customer relationships, and strategic investments to become Canada’s top non-prime, non-bank auto lender could support its loan portfolio expansion. The company’s next-generation credit models and tighter underwriting requirements could lower delinquencies, thus driving its profitability. Meanwhile, the company’s management expects its loan portfolio to expand around 64% in the next three years while improving its operating margin to 43% by 2027. Despite its healthy growth prospects, the company is currently trading at 7.6 times analysts’ projected earnings for the next four quarters. It also offers a healthy dividend yield of 3.96%, making it an excellent buy.
