There’s no question that buying and holding Canadian growth stocks for the long haul is one of the best ways to put your hard-earned money to work. But while high-quality growth stocks can deliver strong returns on their own, buying them while they’re undervalued can significantly amplify that upside.
Over the past year, markets have been driven by shifting interest rate expectations, uneven economic data, and plenty of volatility. And while some stocks have rallied sharply, others are still trading well below their fair value, creating a massive opportunity for investors today.
On top of that, interest rates are already lower than they were a year ago, and expectations for further cuts continue to build. That sentiment is starting to become much more supportive for growth stocks, especially those that are already executing well operationally.
So, if you’re looking for high-quality Canadian growth stocks that still trade at attractive valuations and have the potential to surge over the next 12 months, here are two of the best to buy now.
Source: Getty Images
One of the cheapest Canadian growth stocks to buy now
There’s no question that one of the best Canadian growth stocks to buy for the long haul, especially while it trades dirt cheap, is Cargojet (TSX:CJT)
Cargojet is a top-notch investment because it’s a company that has a dominant position in an industry with massive long-term growth potential.
Cargojet directly benefits from the growing popularity of e-commerce and online shopping, which is a structural trend that isn’t going away anytime soon. And even with a temporary slowdown in online shopping over the past couple of years, and consequently the demand for Cargojet’s services, the company has remained profitable, which goes to show just how reliable and sustainable its operations are.
Looking ahead, analysts are only forecasting modest growth in revenue, earnings before interest, taxes, depreciation and amortization (EBITDA), and normalized earnings over the next 12 months for the Canadian stock.
However, that’s more of a conservative outlook and based largely on the ongoing economic uncertainty and caution around the strength of the consumer rather than any real deterioration in Cargojet’s business.
Furthermore, in 2027, current analyst estimates call for revenue growth of more than 5%, EBITDA growth of roughly 6.6%, and a 25% jump in normalized earnings per share (EPS), which could help Cargojet’s stock to rebound this year, given the forward-looking nature of the market.
Therefore, it’s no surprise that of the eight analysts covering Cargojet, seven rate it a buy, with one hold. Additionally, the average target price sits around $110, roughly 25% above today’s price, while the most bullish estimate implies upside of more than 60%.
So, if you’re looking for top Canadian growth stocks to buy now, Cargojet is certainly one of the top picks to consider today.
One of the best Canadian companies to buy now and hold for decades
In addition to Cargojet, another Canadian growth stock that could see a massive rally over the next 12 months is WELL Health Technologies (TSX:WELL).
WELL is one of those stocks that has the potential to be a core holding for years. The company operates in a defensive healthcare industry with massive long-term tailwinds, yet the stock remains incredibly cheap even as WELL continues to strengthen its core operations.
For example, right now, WELL is trading at just 13.3 times forward earnings. That’s extremely cheap for a growth stock, especially one operating in health care, where demand is stable and largely insulated from economic cycles.
On top of that, the Canadian growth stock trades at only 0.7 times sales, well below its five-year average price-to-sales ratio of 2.1 times.
That ultra-cheap valuation, coupled with WELL’s track record of rapid and consistent growth and the defensive nature of the business, is what makes WELL one of the best Canadian stocks to buy now.
Furthermore, all seven analysts covering WELL Health currently rate it a buy. Additionally, the average analyst target price sits at $7.42, implying upside of roughly 72% from current levels, while the most optimistic target of $9 suggests the stock could more than double over the next 12 months.
So, if you’re looking for a high-quality investment to buy now, WELL is certainly one of the first stocks I’d recommend.
