With tonnes of high-quality growth stocks in Canada trading undervalued, investors with cash on the sidelines have a significant opportunity. The uncertain market and worsening economic environment continue to impact many stocks as we begin November, creating some truly significant bargains.
For the majority of these stocks, especially the highest quality businesses, these impacts on their business operations should only be temporary. So it’s essential to take advantage of the discounts these stocks offer while you still can.
It’s important to note, though, that the more the stock is impacted today, the higher the risk of the investment since nobody knows when the economy will begin to recover or how much worse it could get before it does. Nevertheless, these higher-risk stocks are also the investments that can make Canadians huge gains for years to come when you buy at these levels.
One of the cheapest stocks in Canada
This impressive growth stock has been trading cheaply recently since investors are worried about how it could be impacted in the future by a recession. However, considering it has continued to perform well in recent quarters, thereâs no doubt that one of the cheapest stocks on the market is goeasy (TSX:GSY).
goeasy is a specialty finance company that offers loans to consumers. So as the economic environment has worsened, investors have grown increasingly worried that goeasy could see a significant uptick in its borrowers defaulting on their loans, which could significantly impact their profitability.
To goeasy’s credit, though, it has continued to perform well as of late and has a long track record of keeping its charge-offs within its target range.
Plus, analysts estimate that goeasy will continue to substantially grow its earnings per share (EPS), both this year and next year in 2024.
Analysts expect goeasy’s EPS will increase by 17.3% this year and another 19.3% next year. Therefore, with goeasy trading at a forward price-to-earnings (P/E) ratio of just 7.8 times today and at just 7.3 times its estimated 2024 earnings, it certainly looks like one of the best growth stocks you can buy now.
Two safe growth stocks to buy in November 2023
Although goeasy is an excellent stock and has been an impressive growth stock for years, it does have some heightened risk in this environment, especially if the economy goes into a significant or lengthy recession.
That’s why in this uncertain environment, investors may also want to consider top growth stocks that can help compound your capital over the long run but are also defensive businesses in Canada and aren’t quite as risky today.
Dollarama (TSX:DOL) is an excellent example. Since it sells cheap goods, many of which are household staples, it is incredibly defensive. Indeed, it often sees a boost to its business as the economic environment worsens.
It’s easily one of the best growth stocks in Canada, up over 560% in the last decade. The one drawback of it, though, is that it’s trading just off its all-time high. However, with that being said, a stock that is constantly growing and gains over 500% in a decade will often be trading at its all-time high.
Although there is some risk that Dollarama’s stock could pull back in the near term, especially if its growth in this economic environment slows down. Even so, if you plan to buy the stock and hold for years, it’s easily one of the top growth stocks in Canada.
Fortis (TSX:FTS) is another high-quality stock to consider buying and holding for the long haul.
Fortis is not a typical growth stock that investors regularly think of. In fact, itâs often considered a boring stock with low risk but also no real potential to see astronomical gains.
It is, however, a dividend growth stock and one of the best in Canada, with 50 straight years of dividend increases.
So although it’s not a typical growth stock, it’s still a worthy investment to buy and hold for years. And in this environment, given all the uncertainty, a reliable, low-risk investment that offers a yield of over 4.1% is an investment that many Canadians will prefer.
Before you consider Dollarama, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and Dollarama wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 10/10/23
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Fool contributor Daniel Da Costa has positions in goeasy. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.