There’s no question that the stock market is always volatile. Prices rise and fall constantly, but meaningful corrections are much less common. And it’s even rarer to see high-quality stocks trading at significant discounts. When it does happen, though, it creates one of the best opportunities for long-term investors.
The most substantial gains often come not just from holding a great business for years, but from buying that business when it’s temporarily undervalued.
It’s during these rare periods of weakness, when sentiment shifts and stock prices fall despite strong fundamentals, that investors can set themselves up for significant long-term returns.
Of course, identifying stocks with long-term growth potential is critical. But buying them while they are out of favour can meaningfully improve your results. You’re not just investing in the business’s future growth but also capturing a built-in return as the stock recovers to fair value.
And the lower your initial cost, the more upside you leave yourself. A cheap entry point can significantly boost future gains, both when the stock rebounds in value in the near term and as the company continues to grow its earnings and operations over the long haul.
So if you’ve got cash on the sidelines and are looking to buy a high-quality Canadian stock while it trades at a bargain, goeasy (TSX:GSY), which is currently down roughly 30% from its 52-week high, could be one of the best opportunities available today.
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Why is goeasy one of the best stocks to buy on the dip?
When it comes to high-quality and consistent growth stocks in Canada over the last decade, few businesses have been as solid as goeasy stock.
In fact, in the last five years, its sales have grown from just $610 million in 2019 to more than $1.5 billion in 2024, a compound annual growth rate (CAGR) of 20%. In addition to its revenue growth, though, more importantly, is the constant growth in its profitability.
Over that same five-year stretch, goeasy’s normalized earnings per share (EPS) increased from $5.17 in 2019 to an incredible $16.71 in 2024. That’s a more than 200% increase in just five years and a CAGR of more than 26.1%.
This goes to show two things. First off, it shows just how quickly and consistently goeasy is growing its sales and operations. However, it also shows how well goeasy is managing its risks and keeping its margins strong.
In fact, over those five years, goeasy’s return on equity has never dipped below 20%. Furthermore, that rapid growth has led to significant gains for investors of goeasy stock.
In just the last five years alone, the stock has earned investors a total return of roughly 248% or a CAGR of 28.3%, showing why it’s one of the best growth stocks to buy and hold for the long haul, especially if you can buy it on the dip.
Plus, in addition to the capital gains potential goeasy offers, it has also been rapidly increasing its dividend as its earnings have skyrocketed. In fact, in 2019 it paid out just $1.24 in dividends per share. Today, its annual dividend is more than quadruple that, at $5.84 per share.
Furthermore, with goeasy trading roughly 30% off its 52-week high, its dividend yield has increased to more than 4%. That’s nearly the highest it has ever been, and well above its five-year average forward yield of 2.8%, which is an incredibly attractive yield for such a high-potential growth stock.
How cheap is goeasy today?
With goeasy trading roughly 30% off its 52-week high, it’s certainly a steep discount, but it’s even cheaper when you consider the growth potential goeasy has in the coming years.
At just over $140 per share, goeasy is trading at just 8.2 times its expected earnings in 2025, and just 6.6 times its expected earnings in 2026.
That’s significantly lower than its five-year average forward price-to-earnings ratio of 10.5 times.
Therefore, while one of the best growth stocks on the market trades so cheaply while also offering a yield of more than 4%, there’s no question that this could be the bargain of the decade for long-term investors.
