Written by Rajiv Nanjapla at The Motley Fool Canada
Amid concerns over rising prices, central banks around the world have raised interest rates. However, rising interest rates have increased borrowing costs, hurting margins for growth stocks, which need higher capital to fund their growth initiatives. So, amid these concerns, growth stocks have been under pressure for the past few months.
However, the sharp correction has allowed investors to start hoarding the next three cheap growth stocks, which have the potential to double your investments over the next three years.
easy (TSX: GSY) is a great growth stock to have in your portfolio, given its strong track record, growth potential and attractive valuation. Over the past 20 years, the company has grown its revenue and earnings by double digits. Despite its solid performance, the company has just acquired 3% of its addressable market (loans below $50,000).
With the subprime mortgage market highly fragmented, the company has the potential to expand its market share, given its omnichannel lending services, penetration in key geographic markets, geographic expansion and focus on improvement of the customer experience. The company added new verticals through the acquisition of LendCare. At the same time, the production of loans could increase with the improvement in economic activity, thus benefiting goeasy.
Notably, goeasy management has set a strong three-year outlook, hoping to grow its loan portfolio by 67% to $3.6 billion by 2024. The company has also increased its dividend at a CAGR of over 34% since 2014. However, amid the recent selloff, the company has lost more than 50% of its stock value from its 52-week high. Its NTM price-to-earnings ratio also fell to an attractive 8.4. So considering all of those factors, I think goeasy would be a great buy right now.
WELL health technologies
Another cheap stock you should start accumulating would be WELL health technologies (TSX: GOOD). The digital healthcare company is trading more than 60% below its 52-week high. However, the company continues to strengthen its finances amid the growing popularity of virtual services. Supported by a 40% year-over-year growth in total omnichannel patient visits, the company reported record revenue in May.
WELL Health announced the acceleration of its mergers and acquisitions activities. Currently, it is working on the acquisition of INLIV, a high-end omnichannel primary care provider, which could expand its presence in Alberta. Thus, given its healthy growth initiatives, the company’s management expects its revenues to exceed $525 million while approaching $100 million in adjusted EBITDA. So, given the favorable environment, growth initiatives and reduced stock price, I believe WELL Health can double your investment in the next three years.
Third on my list is Nuvei (TSX:NVEI)(NASDAQ:NVEI), which has lost more than 75% of its market value from its September highs. The correction caused its NTM P/E ratio to drop to 15.1, making it an attractive buy. With the growth of e-commerce, digital payments are also becoming popular. Meanwhile, the company is also expanding its APM (alternative payment method) portfolio, introducing innovative new products and venturing into new markets to add new customers and increase revenue per customer.
Nuvei is also strengthening its presence in the online sports betting and iGaming space, which is growing amid increased legalization. At the same time, the company’s management expects its revenue growth rate to be 30% in the medium term while achieving an adjusted EBITDA margin of 50% in the long term. So, given its multiple growth engines and attractive valuation, I expect Nuvei to generate superior returns over the next three years.
The post 3 Oversold Growth Stocks That Could Double Your Investments in 3 Years appeared first on The Motley Fool Canada.
Before you consider Nuvei, we think you’ll want to hear this.
Our Stock Advisor Canada team has just released its top 10 starting stocks for 2022 that we think could energize any portfolio.
Want to see if Nuvei makes our list? Get started with Stock Advisor Canada today to receive our top 10 stocks, a comprehensive treasure trove of industry reports, two new stock recommendations every month and much more.
See the 10 Actions * Returns from 04/14/22
The Motley Fool fills positions and recommends Nuvei Corporation. Foolish contributor Rajiv Nanjapla has no position in any of the stocks mentioned.