When it comes to investing your hard-earned money for the long haul, there’s no question that finding high-quality growth stocks to buy is one of the best ways investors can build wealth.
High-quality growth stocks are businesses with expanding markets, strong competitive positions, and scalable models that allow them to grow revenue and earnings year after year. When you find the right one, a single investment can compound into something far greater over time.
What makes a growth stock ideal isn’t just its track record; it’s the potential it has moving forward. You want to look for companies that are still gaining market share, reinvesting in themselves, and positioned in industries with long runways. A strong management team, solid margins, and a clear path to future expansion are all key factors to watch for.
And because many growth stocks typically trade at premium valuations, the best time to buy is when the market is temporarily overlooking their potential. Buying a high-quality growth stock while it’s undervalued gives you the chance to benefit not just from business growth, but from a re-rating as the market catches up.
So, if you’ve got $500 to invest and want to maximize your long-term upside, here’s why goeasy (TSX:GSY) is one of the best growth stocks to buy right now.
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goeasy has been one of the best growth stocks to buy on the TSX for years
Doing quick research on goeasy tells you exactly why it has been one of the best growth stocks to buy on the TSX for years.
Not only has its revenue grown at a compound annual growth rate (CAGR) of 20.1% over the last five years and its normalized earnings per share (EPS) even faster, at a CAGR over the last half decade of 26.4%, but the performance of the stock has been even more impressive.
When you factor in the dividend, goeasy has earned investors a total return of 985% over the last decade. That’s a CAGR of 26.9%.
However, although an incredible track record is positive and goeasy analysts are estimating more growth going forward, it’s essential to understand what goeasy does and how it makes money before making an investment.
goeasy focuses on lending to the non-prime market, offering personal, auto, and point-of-sale loans to individuals who don’t qualify for traditional bank credit.
What sets goeasy apart in the financial sector, though, is its defensible niche. Unlike banks, which face fierce competition for prime borrowers, goeasy operates in an underserved segment with significantly less direct competition, which is another major reason it’s one of the best growth stocks to buy now.
Furthermore, although serving customers with below-prime credit ratings comes with increased risk, it also means goeasy can charge higher interest rates to compensate for that risk.
Therefore, thanks to its proprietary underwriting models and deep historical data, goeasy has consistently proven, year after year and across various economic environments, that it can manage its credit risk effectively, which is a major factor in keeping charge-off rates stable at around 9%, even during economic headwinds.
Why is goeasy a good investment today?
In addition to the successful track record goeasy has developed, it continues to be one of the best growth stocks to buy now due to the fact that it’s still a relatively small business with a market cap of $2.6 billion. Furthermore, it continues to have years of growth potential ahead of it, and it even trades at an undervalued price today.
With analysts expecting goeasy’s normalized EPS to jump another 30% by the end of next year, the stock is certainly undervalued.
Furthermore, GSY stock also pays an attractive dividend with a current yield of just over 3.5%. However, while goeasy returns some cash to investors, its payout ratio is roughly 35%. That means not only is the dividend incredibly sustainable, but goeasy also continues to invest the majority of its earnings back into growing the business, which is ideal for long-term investors.
So, with goeasy trading at a forward price-to-earnings ratio of 8.6 times, below its five-year average of 10.5 times, and with the stock offering a yield of more than 3.5%, there’s no question it’s one of the best growth stocks to buy now.
