Growth stocks will potentially grow faster than the industry average, thereby delivering superior returns in the long run. Unlike established companies that distribute their profits to their shareholders, growth companies tend to reinvest their earnings to fund their growth initiatives.
The following two Canadian growth stocks have been under pressure this year and are trading at a significant discount compared to their 52-week highs. With robust growth prospects and compelling valuations, I believe these two stocks are well-positioned to deliver strong long-term returns.
Source: Getty Images
Lightspeed Commerce
Lightspeed Commerce (TSX: LSPD) offers omnichannel solutions to businesses across the retail, hospitality, and golf sectors in over 100 countries. The company has witnessed solid buying over the last couple of months, with its stock price rising by over 73% compared to its April lows. Despite the recent surge, it is still trading 31.5% lower compared to its 52-week high. Also, its NTM (next 12 months) price-to-sales multiple looks reasonable at 1.5.
Moreover, the growth in e-commerce has prompted many enterprises to take their business online, thereby creating long-term growth potential for Lightspeed. Meanwhile, the company is focusing on the development of innovative products and adding artificial intelligence-powered features to meet its customers’ needs. These features would help retailers in inventory management, supplier integration, providing real-time product information, and delivering a seamless omnichannel experience. Along with these growth initiatives, the company has adopted several cost-cutting measures to improve profitability.
Additionally, Lightspeed has repurchased around 18.7 million shares under its share repurchase program for approximately $219 million, lowering its outstanding shares by 12%. Amid its growth initiatives, the company’s management predicts its topline to grow 10%—12% in fiscal 2026, while generating an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $68 million to $72 million. The midpoint of the adjusted EBITDA guidance represents a 30.4% increase from its fiscal 2025 levels. Considering its expanding addressable market, growth initiatives, and attractive valuation, I believe the uptrend in Lightspeed could continue, thereby delivering superior returns over the next three years.
Docebo
Another growth stock that has been down significantly compared to its 52-week high is Docebo (TSX: DCBO), which offers an end-to-end learning platform to enterprises worldwide. The Orlando-based LMS (learning management solutions) provider has been under pressure this year due to rising competition and investors’ expectations of growth slowing down. It has lost close to 44% of its stock value compared to its 52-week high.
Meanwhile, Docebo reported a healthy first-quarter performance in May, with its topline growing by 11%. Its growing average contract value and new customer wins have boosted its sales. Besides, its adjusted net income rose 16.4% to $8.5 million, while generating $9 million of free cash flows. The company ended the first quarter with cash and cash equivalents of $91.9 million, thereby allowing it to fund its growth initiatives.
Moreover, Precedence Research predicts global LMS market growth at an annualized rate of 18% between 2024 and 2034. Amid the growing addressable market, Docebo is investing in artificial intelligence (AI) to develop AI-powered products and features to strengthen its market share and drive its financials. Meanwhile, Docebo’s management forecasts its 2025 topline to grow by 9-10%, while its adjusted EBITDA margin is expected to come binìetween 17-18%. The 2025 EBITDA margin guidance represents an improvement from 15.5% in 2024. Given its growth prospects, improving profitability, and discounted stock price, I am bullish on Docebo.
