Advertisement
Canada markets close in 4 hours 41 minutes

  • S&P/TSX

    21,755.44
    -118.28 (-0.54%)
     

  • S&P 500

    5,003.59
    -68.04 (-1.34%)
     

  • DOW

    37,828.61
    -632.31 (-1.64%)
     

  • CAD/USD

    0.7297
    -0.0001 (-0.01%)
     

  • CRUDE OIL

    82.42
    -0.39 (-0.47%)
     

  • Bitcoin CAD

    86,985.61
    -1,974.95 (-2.22%)
     

  • CMC Crypto 200

    1,372.81
    -9.77 (-0.71%)
     

  • GOLD FUTURES

    2,347.50
    +9.10 (+0.39%)
     

  • RUSSELL 2000

    1,967.53
    -27.90 (-1.40%)
     

  • 10-Yr Bond

    4.7080
    +0.0560 (+1.20%)
     

  • NASDAQ

    15,433.54
    -279.21 (-1.78%)
     

  • VOLATILITY

    17.02
    +1.05 (+6.58%)
     

  • FTSE

    8,069.66
    +29.28 (+0.36%)
     

  • NIKKEI 225

    37,628.48
    -831.60 (-2.16%)
     

  • CAD/EUR

    0.6808
    -0.0011 (-0.16%)
     
BREAKING:

HONDA TO SET UP $15B EV PRODUCTION BASE IN CANADA

Automaker to get up to $5B in government assistance for EV battery, assembly plants

3 High-Growth TSX Stocks That Could Soar

Christopher Liew, CFA
·4 min read
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept

Written by Christopher Liew, CFA at The Motley Fool Canada

The stock market still stands on shaky ground, but impressive corporate earnings releases counter the negative sentiment. On July 29, 2022, the TSX rose triple digits for the third consecutive day to finish at 19,692.92. Some market observers think it was a relief rally and investors could be positioning for a rebound.

High-growth stocks are likewise plenty, although three names could soar faster and higher than others. Sleep Country Canada Holdings (TSX:ZZZ). Spin Master (TSX:TOY), and Advantage Energy (TSX:AAV)(NYSE:AAV) should be in your watchlist, if not your buy list, this month.

Sleep ecosystem

Sleep Country is the leading specialty sleep retailer in Canada. The $1.05 billion company boasts a national retail store network and multiple e-commerce platforms. Performance-wise, the total return of this consumer cyclical stock in 3.01 years is 68.43% (18.9% compound annual growth rate [CAGR]). The share price is $28.64, while the dividend yield is 3%.

ADVERTISEMENT

In Q2 2022, revenues and adjusted net income increased 18.4% and 42.7% versus Q2 2021. Stewart Schaefer, president and CEO of Sleep Country, said, “In these turbulent and uncertain times, in spite of the backdrop of weakening consumer sentiment, we remain positive and focused on delivering on our long-term strategic plan.”

Schaefer added that management remains sensitive to the Canadian consumer and price increases. He credits the strength of the business to a sleep ecosystem with multiple brands, expanded channels, and innovative products. Market analysts covering the stock have a 12-month average price target of $37.43 (+30.7%).

Strong revenue growth

Spin Master carries a buy rating from market analysts who see a 32.3% upside potential in one year. This consumer cyclical stock trades at $47.73 per share and offers a modest 0.50% dividend. The $4.91 billion company is a global leader in children’s entertainment and play experiences.

Toys, Entertainment, and Digital Games are the three creative centres that contribute to total revenues. In Q2 2022, the business enjoyed strong revenue growth, record margins, and profitability. For the first half of the year, revenue grew 31.5% to US$930.5 million versus the same period in 2021.

Notably, net income in the six months ended June 30, 2022, soared 264% year over year to US$133.7 million. Mark Segal, Spin Master’s CFO, said, “We are committed to our financial framework for value creation, underpinned by our formula for innovation and disciplined global growth across all of our creative centres.”

The quarterly dividend declared after Q2 2022 was the first ever for the company.

Top price performer

Advantage Energy is the logical choice for superior capital growth. At $11.01 per share, the energy stock outperforms with its 48.58% year to date. Also, the total return in 3.01 years is an eye-popping 529.14% (84.2% CAGR).

This $2.09 billion oil and gas company enhances shareholder value through its strong platform for growth. Its platform that consists of a high-quality light oil, a prolific gas foundation, and low-cost infrastructure to enhance shareholder value. In Q3 fiscal 2022, free cash flow reached a record $139.5 million.

Pick Canadian stocks  

Patrick Horan, principal at Agilith Capital, “Our expectation is that this rally has legs and it will last — it’s a durable rally. It may not be durable for all of the stocks out there, but certainly durable for the cyclicals.” He also sees more opportunity in Canadian stocks than U.S. equities.

The post 3 High-Growth TSX Stocks That Could Soar appeared first on The Motley Fool Canada.

5 Free Passive Income Stock Picks for 2022

Looking for high-quality Canadian stocks that pay attractive dividends?

Our market beating* Stock Advisor Canada team has released a new report revealing five blue-chip Canadian stocks that pay handsome dividends, and we’re giving away this report for free for a limited time.

Get our favorite passive income stocks today, and learn more about all the perks Stock Advisor Canada provides our members!

Get Your Free Report * Returns as of 6/22/22

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Spin Master Corp.

2022