It’s a weird time for Canadian investors. On the one hand, we have Canadians looking at gold reaching record highs, with volatility off the charts. On the other hand, the TSX continues to surpass all-time highs, leading many to believe now is the time to look into growth stocks once more.
But the question is: which growth stocks? That’s why today, we’re going to look at not just strong growth stocks, but safe ones. There are investments that you can safely grab today and hold knowing that they will continue to be growth stocks for the foreseeable future. So, let’s look at three Canadian growth stocks that are winners.
Loblaw
Loblaw Companies (TSX:L) stock recently had its earnings report, but that wasn’t the only reason investors have been quite excited about the growth stock. The Canadian grocery giant, owning everything from No Frills to Shoppers Drug Mart, completed a 4-for-1 stock split along with the strong second-quarter (Q2) performance. This performance included increases in both revenue and e-commerce, showing the stock continues to be a top choice for Canadian grocery shoppers.
The growth stock also demonstrated top-line growth, with a revenue increase of 5.2% year over year. However, it wasn’t a perfect all-around quarter. Loblaw holds a significant amount of debt, and this is a critical factor for today’s investor to monitor. That being said, the growth stock offers a stable dividend and undergoes regular share buybacks, signalling that management remains confident in the stock.
With stable core holdings, defensive qualities, income and a great price, Loblaw stock now looks like a strong investment for growth stock investors. However, be sure to monitor the debt closely, and be cautious of any macroeconomic trends that could impact it.
WELL Health
Another top growth stock that many Canadian investors continue to sleep on is WELL Health Technologies (TSX:WELL). Again, this growth stock just underwent not just earnings, but record earnings. Revenue surged by 57% in the second quarter. This came from merger and acquisition activity, as well as artificial intelligence (AI) integration.
Now, there is upside, but there’s also risk. WELL stock continues to have a lot of speculative potential, specifically when it comes to its ambitious acquisitions and AI-led developments. However, the growth stock continues to hold a substantial amount of debt. And with no dividend to speak of, risk-tolerant investors may just want to consider a small position in this tech darling.
For investors considering WELL stock, it would be best to monitor the company’s conversion and acquisition return on investment (ROI). Success will hinge on the effective integration of the company’s acquisitions to bring that debt down.
Kinaxis
Finally, Kinaxis (TSX:KXS) lands somewhere in between these two. While it offers the tech excitement of WELL Health, it also holds the stability of Loblaw. Kinaxis recently reported its earnings as well, showing strong annual reporting revenue (ARR) and increased revenue. This was supported by Software as a Service (SaaS) and artificial intelligence features that enhanced its enterprise upsells.
Now, while there was solid growth, including in share price, the high valuation shows strong prospects, but for a price. This will depend strongly on continued execution as well as client retention. And again, the growth stock doesn’t offer a dividend, so focus on its strong cash position and low debt here. This will support any future investment opportunities.
For investors considering the stock, this is a high-quality SaaS growth stock with sound profitability. It’s also priced to perfection, so focus on its ARR growth before creating a large position.
Bottom line
When it comes to these growth stocks, there are a few options to consider. Loblaw is best if you’re a conservative investor looking for a defensive investment with a focus on stability, plus a little income on the side. WELL Health is great for speculative investors looking for some risk with the potential for high reward. Finally, Kinasxis offers strong growth potential, with quality SaaS and is a great way to get in on a balanced growth story.
