Aside from the mega-cap tech stocks most investors are well aware of, there happen to be a number of under-the-radar growth stocks I’ve long thought are worth considering for investors looking outside of the U.S. market for growth.
Indeed, the Canadian market provides investors with a plethora of fantastic high-quality companies to choose from. However, because of where these companies are based, it’s often the case that a lack of analyst coverage and investor interest can lead to larger-than-typical valuation discrepancies long-term investors can take advantage of.
With that in mind, here are two of my top ideas for investors considering Canadian growth stocks right now.
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Kinaxis
Canadian supply chain management company Kinaxis (TSX:KXS) continues to be a top growth stock that many Canadian investors may be aware of. But outside of the company’s home jurisdiction, this is an AI stock that’s certainly flying under the radar, given where Kinaxis’ valuation currently sits.
The company carries a relatively attractive forward price-earnings multiple of around 30 times. Impressively, that multiple comes as the company’s year-over-year revenue surged 15%, with its bottom-line earnings growing by a whopping 437% in its SaaS division.
As a key software as a service (SaaS) player, Kinaxis stands to benefit from relatively higher margins alongside more scalable and dependable growth. The company has seen its customer count continue to grow, and this growth rate deserves a much higher multiple, at least in my view.
Thus, investors seeking growth at a reasonable price certainly have a research-worthy pick in Kinaxis at current levels.
The Metals Company
One of the more intriguing under-the-radar small-cap stocks Canada has to offer has to be The Metals Company (NASDAQ:TMC).
This deep-sea mining company has seen its share price absolutely skyrocket, mostly due to some commentary around U.S. focus on critical minerals (rare earths and other essential minerals used in battery development), alongside some intriguing prospects for Canadian companies to benefit from rising U.S. investment in these geopolitically important assets.
As it happens, TMC is among the best-positioned in the nascent deep sea mining space to provide international markets such as the U.S. with the key minerals needed for growth. As such, investors are now clearly pricing in much higher probabilities that further permits are approved, and the company’s cash flow generation potential has clearly been pulled forward.
I’ve been bullish on this stock for a long time, back when it was hovering in penny stock territory. However, now trading around $10 per share, this is a stock that I think now has the momentum for a number of new investors to get behind. In other words, I think it’s far too late to say the rally in TMC stock is over. Indeed, I think it could just be beginning, given this company’s potential upside.
