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It appears that growth stocks have once again caught the eye of investors, as a number of them have registered stellar gains in the year to date. First, the economy is doing better than many market experts predicted. In addition, the rebound reflects the moderation of the inflation rate, which raises the sentiment of investors and paves the way for slowing down or stopping further interest rate increases.
While many Canadian stocks have delivered outstanding returns so far this year, the recovery is far from over, and there could be more gains on the way. So, let’s take a look at three of Canada’s hottest stocks that can deliver explosive growth.
GOOD Health
Features of the digital healthcare company GOOD Health (TSX: WELL) is on pace to rebound in 2023. The stock has gained more than 67% year to date, reflecting its strong financial performance despite the opening economy and macro uncertainty. While WELL Health’s stock has marked substantial growth, it has plenty of room to operate, considering its low valuation.
Surprisingly, WELL Health has been able to grow revenues rapidly in the post-pandemic world. Its ability to drive omnichannel patient visits supports its top line. Additionally, its management remains bullish and expects its earnings momentum to continue. Due to the strength of its business, WELL Health’s management raised its revenue guidance to 2023.
Aside from omnichannel patient visits, the tech stock is likely to benefit from continued growth in its high-margin virtual services business. In addition, its focus on accretive acquisitions and investments in AI (artificial intelligence) will drive its responsive market and new product development.
WELL Health is profitable and continues to grow rapidly. However, its stock is trading very cheaply. It’s trading on a trailing 12-month price-to-sales multiple of 2.1, which is about a fifth of pre-COVID levels. Overall, its high growth and low valuation indicate that WELL Health stock can deliver explosive growth in the future.
fee
fee (TSX: PAY) is another attractive stock that should be on investors’ radar. The fintech offers digital banking and payment solutions to the gig economy workforce and witnessed a recovery in its share price in 2023. Despite the macro headwinds, the company managed to grow its top line, led by higher active user base. Additionally, Payfare has consistently generated positive adjusted earnings before interest, taxes, depreciation, and amortization in past quarters.
Payfare’s strategic partnership with leading ride-sharing and food-delivery platforms shows that the company can continue to deliver steady growth. Meanwhile, the expansion of international markets and new customers have won a good position to provide stable growth.
Looking ahead, its recurring revenue base, reduced customer acquisition costs, and new product launches bode well for future growth.
WEAK
WEAK (TSX:GSY) is another explosive growth stock. Subprime lending has delivered huge returns over the past decade. However, fears of a recession have led investors to dump its stock. However, the company continues to generate solid double-digit revenue and earnings growth. Meanwhile, its stock is trading too cheap to ignore.
goeasy stock is trading at a trailing 12-month price-to-earnings ratio of 7.7, well below its pre-COVID level of 11.5.
This pullback in goeasy is an excellent opportunity for investors to buy and hold shares of this high-growth company. High quality loan sources and strong credit performance position are good to provide stable sales and profits. In addition, omnichannel offers and wide product range are positive.
Management expects to deliver double digit sales growth in the medium term. Meanwhile, its operating margins are expected to expand by 100 basis points over the same period. Overall, goeasy is a must-have stock to generate outsized returns for years to come.