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Written by Kay Ng at The Motley Fool Canada
This group of beaten-down growth stocks could provide the upside you want to grow your wealth faster. Check them out to see if they fit your investment portfolio.
Dye & Durham
Dye & Durham (TSX:DND) has fallen about 20% from its September levels. Investors were expecting the company to be taken private for $3.4 billion (i.e., $50.50 per share) — news that came out in May. However, that appears to have gone down the drain.
Despite the selloff, DND stock is still 60% higher than it was a year ago. The correction could be a buying opportunity in the tech stock that has been growing by acquisitions and integration. For fiscal 2021, which ended at the end of June, the company boosted revenue by 219% to almost $209 million, while wildly increasing its adjusted EBITDA, a cash flow proxy, by nearly $80 million to $116 million.
Over the next 12 months, it could appreciate about 40% if its M&A strategy works out. Let’s say it only returns to its would-be privatization price of $50.50; the growth stock would still deliver a respectable upside of 34%.
Cargojet (TSX:CJT) dominates the skies of Canada for time-sensitive overnight air cargo services, and it’s working on its international expansion. Aligning with the strategy to expand globally, back in August, it acquired a 25% stake in 21Air, a cargo airline headquartered in North Carolina.
The growth stock has ridden on the tremendous growth in e-commerce. The last 10 years saw Cargojet stock generating fantastic returns of roughly 40% per year! That is, an initial investment of $10,000 would have transformed to more than $285,000. E-commerce sales are projected to exceed brick-and-mortar retail sales in the foreseeable future. Therefore, the growth stock should be able to soar even higher for the long haul.
From last year’s high, the stock has descended about 20%. Primarily, it’s because the business (and the stock) performed excessively well during the pandemic, and this year, we’re seeing more normalized results from the company.
Over the next 12 months, the growth stock could ascend another 25% or so. Though, beware that stocks can experience higher than average volatility around earnings time. So, investors should note that the company will be reporting its third-quarter results before the market opens on November 1.
Sylogist (TSX:SYZ) could be an incredible turnaround story. The tech stock sold off more than 40% from its peak to trough this year. From the bottom, it has climbed approximately 15%. Much of that upward action happened last week with the support of massive trading volume. The trigger seems to be recent acquisition activities and the growth that’s anticipated to come with them.
Specifically, this month, Sylogist picked up two acquisitions. Both companies provide software-as-a-service applications, but target different clients: public sector organizations, member associations, and non-profit organizations. The acquisitions are expected to increase Sylogist’s adjusted EBITDA by at least $1.6 million, which would be an increase of approximately 8% to Sylogist’s 2020 adjusted EBITDA of $20.4 million.
Sylogist’s 10-year annualized total return is roughly 22%. The market selloff could be a good time to buy before growth shows in its results. Analysts believe the growth stock can climb 40% over the next 12 months. Notably, though, it is a small-cap stock with a market cap of about $276 million. So, interested investors should size their positions accordingly.
The post These 3 Beaten-Down Growth Stocks Could Climb up to 40% Soon appeared first on The Motley Fool Canada.
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The Motley Fool owns shares of and recommends CARGOJET INC. Fool contributor Kay Ng owns shares of Cargojet and Sylogist.