It’s not uncommon for investors looking to buy Canadian growth stocks to focus on the hottest stocks or most popular companies. However, while these stocks can certainly offer attractive growth potential, some of the best opportunities lie with stocks that fly under the radar.
Typically, the more well-known a company is, the more demand there is for its shares. So while you can buy a popular growth stock that has significant future potential, if you’re looking for a stock that has both growth potential and trades cheaply, it’s best to look for a lesser-known business.
The key for investors, though, is to ensure these stocks have the same quality as a well-known growth stock with a longer track record.
You want to find companies that are consistently expanding their market share, improving their economics, and compounding value year after year.
You also want to buy stocks with as much growth potential as possible and as cheaply as possible, but only if you believe they have the fundamentals to be a long-term investment.
So, with that in mind, if you’re looking for high-quality Canadian growth stocks that are flying under the radar, here are four top picks to consider.
An exciting fintech stock
If you’re looking for a high-potential growth stock that’s still flying under the radar, you may want to consider Propel Holdings (TSX: PRL) before it gets any bigger.
Propel is a $1 billion fintech lender that serves non-prime and near-prime consumers online.
What has made Propel so successful is its asset-light, data-driven business model that uses artificial intelligence to power its proprietary underwriting and risk management process.
Furthermore, the stock is now trading near the bottom of its 52-week range. And with all six analysts covering Propel giving it a buy rating and its average analyst target price sitting at $43.50 – a more than 65% premium to where it’s trading today – there’s no question it’s one of the best under-the-radar growth stocks Canadian investors can consider.
An impressive growth-by-acquisition stock
Despite its $3 billion market cap, another lesser-known growth stock for Canadian investors to consider is TerraVest Industries (TSX: TVK).
TerraVest owns a variety of industrial businesses in niche markets where it doesn’t need to compete with multiple companies. The company manufactures products such as propane tanks, residential and commercial heating equipment, energy processing equipment, and much more.
However, while it may seem like TerraVest is a boring company, the fact that it has already gained 22% year to date and 37.6% over the last 12 months means it’s a stock you won’t want to ignore.
Furthermore, TerraVest has proven time and again that it can make smart acquisitions that help to expand its footprint and improve the economics of its operations.
And while three of the six analysts rate TerraVest a buy and the other three are recommending investors hold, its average analyst target price of $178.50 is a nearly 30% premium to where the Canadian growth stock is trading today.
One of the best Canadian growth stocks to buy now
One stock that’s a bit more popular than the rest, but still trades cheaply and flies under the radar for a lot of Canadians is WELL Health Technologies (TSX: WELL).
WELL’s popularity exploded during the pandemic when its digital health apps and telehealth businesses saw massive increases in demand.
And while the company has continued to grow its technology business, both organically and through smart acquisitions, most of WELL’s growth potential going forward is as the largest owner/operator of outpatient clinics in Canada.
It has proven for years its ability to acquire clinics at reasonable valuations, then immediately use its expertise to improve the economics and drive earnings growth.
A laundry and linen company that’s quietly expanding its operations
Lastly, if you’re looking for a reliable business with strong recurring revenue and long-term growth potential K-Bro Linen (TSX: KBL) is certainly worth considering.
K-Bro is the market leader for laundry and linen solutions, serving businesses such as hospitals and hotels in Canada and the U.K.
And while the stock is up 17% over the last 12 months, going forward, analysts estimate its revenue will grow at a compound annual growth rate (CAGR) of 24.1% over the next two years, while its normalized earnings per share are expected to increase at a CAGR of 20%.
