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Growth stocks are back in focus amid improvement in investors’ sentiments. The signs of easing inflation and the Federal Reserve’s decision to pause interest rate hikes have increased investors’ optimism, driving the S&P/TSX Composite Index higher this month. Amid the favourable market environment, you can buy the following three under-$30 growth stocks to earn higher returns over the next three years.
Nuvei
Nuvei (TSX:NVEI) is a digital fintech company that facilitates its partners accepting next-gen payment methods, thus driving their growth. The company has been witnessing healthy buying this month amid broader improvement in investors’ sentiments, solid third-quarter performance, and the raising of management’s guidance. The stock is up around 37% for this month. Despite the recent surge, it is still 55% lower compared to its 52-week high, thus offering an excellent entry point for long-term investors.
The fintech company has continued to launch innovative products and expand its APM (alternative payment method) portfolio, thus growing its total addressable market. Besides, the company’s profitability and financial position are also improving. In the recently reported third-quarter earnings, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin improved 40 basis points to 36.3%. Meanwhile, its leverage ratio (net debt divided by trailing 12 months adjusted EBITDA) declined from 2.9 at the end of the first quarter to 2.6.
Further, Nuvei’s management has raised its 2023 guidance, with the midpoint of its revenue and adjusted EBITDA guidance representing 40.5% and 22.7% year-over-year growth, respectively. Besides, the management projects its topline to grow at an annualized rate of 15%–20% in the medium term while improving its adjusted EBITDA margin to 50% in the long run. Given its excellent growth prospects, I expect Nuvei to deliver superior returns over the next three years.
WELL Health Technologies
Last week, WELL Health Technologies (TSX:WELL) also reported excellent third-quarter performance, with its revenue and adjusted EBITDA to its shareholders growing by 40.2% and 13.2%, respectively. The strong performance across its three reporting segments, Canadian Patient Services, USA Patient Services, and SaaS and Technology Services, drove its financials.
Meanwhile, the company has continued its growth initiatives by acquiring Proack Security, which could enhance its capabilities in safeguarding its partners’ sensitive data while providing robust security services. Further, the company has launched several AI (artificial intelligence) powered systems that could expand its customer base and drive its financial growth.
Amid its solid third-quarter performance and healthy growth prospects, WELL Health’s management has raised its 2023 revenue guidance to between $755 million and $765 million. Further, management hopes to achieve $900 million in revenue in 2024. So, given its healthy growth prospects and an attractive NTM (next 12 months) price-to-earnings multiple of 13.3, I believe WELL Health is an excellent buy right now.
Lightspeed Commerce
My final pick would be Lightspeed Commerce (TSX:LSPD), which is trading over 30% higher for this year. Its solid second-quarter performance of fiscal 2024, which ended on September 30, drove its stock price. During the quarter, the company’s revenue came in at $230.3 million, representing 25% year-over-year growth and higher than the previously stated guidance of $210 million–$215 million.
Its retail and restaurant offerings are gaining traction with its customers, accounting for one-third of customer locations. Further, its Unified Payments initiative has started to deliver the desired results, with the platform processing around 25% of the company’s GTV (gross transaction value). Also, its innovative product launches have contributed to its financial growth. Meanwhile, the company has posted its first positive adjusted EBITDA and is on track to breakeven or deliver better adjusted EBITDA for this fiscal year.
Amid improving financials and its healthy growth prospects, I expect the uptrend in Lightspeed Commerce to continue.
