3 Growth Stocks Down Over 50% That Are Screaming Buys in January 2023

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The merchant sees a red arrow hit the ground

With inflation easing, investors believe that monetary tightening efforts by central banks are yielding the desired results. Amidst this belief, the S&P/TSX Composite Index Up 6.2% year to date. Despite the recent recovery, the following three Growth stocks It is trading at a 50% discount compared to its 2021 high. The start of the recovery rally gives them an opportunity to buy them even further on the dip. Investors can start accumulating these stocks to get better returns over the next three years.

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Lightspeed Trading

Amid renewed interest in growth stocks, Lightspeed Trading (TSX:LSPD) share price is up 20% year to date. Despite the recent rally, it still trades at about an 86% discount from its all-time high. Notably, with its NTM (next 12 months) price-to-sales multiple and price-to-book multiple of 3.2 and 0.8 respectively, its valuation is attractive.

Meanwhile, demand for Lightspeed’s products and services is growing with the adoption of omnichannel sales and increasing penetration of Internet services. Despite the challenging environment, the company’s total transaction value and revenue grew by 18% and 38%, respectively, in the September-ended quarter. With the introduction of its flagship products, I expect the boom to continue.

Besides, with the aim of improving its profitability, Lightspeed is focusing on integrating its recently acquired companies and products. This initiative allows the company to reduce its workforce by 10% while improving its efficiency. So, given its growth efforts and discounted share price, I expect Lightspeed’s stock price to double over the next three years.

Well Health Technologies

Well Health Technologies (TSX: Right), a digital healthcare company, has seen significant buying this year, with its stock price up 22.2%. However, it still trades 63% below its all-time high. Also, its NTM price-earnings ratio stands at 13.7. It still looks cheap for a company operating in a sector that is expected to grow at an annual rate of 24% until 2030.

In the recently reported third quarter, WELL Health’s revenue rose 47% to $145.8 million, while its adjusted EBITDA (earnings before interest, tax, depreciation and amortization) rose 23% to $27.5 million. Solid organic growth and strategic acquisitions in its virtual services division drove its finances. Meanwhile, the company is strengthening its footprint in the US and Canada, which could boost its growth in the coming years.

The company’s management expects its revenue flow rate to reach $700 million by the end of this year, representing a 20% growth from its current levels. So, given its high-growth prospects and cheap valuation, I expect Well Health to deliver multiple returns over the next five years.

I will teach

Another growth stock that lost more than half of its share value I will teach (TSX:DCBO), a provider of learning management solutions (LMS). Investors feared the company’s growth could slow with the easing of restrictions spurred by the pandemic. Besides, rising interest rates and expensive valuation affect the company’s share price.

However, the adoption of LMS is increasing due to its cost-effectiveness and convenience. Markets and Markets The LMS market is projected to grow at a CAGR (compound annual growth rate) of around 19% over the next three years. Based on its multi-product learning portfolio, the company can benefit from market expansion.

Docebo enjoys high customer retention, while its average contract value has quadrupled since 2016. And in its September-end quarter, it posted positive adjusted EBITDA ahead of schedule. So, given its improved financials, healthy growth prospects and discounted share prices, I am bullish on Docebo.

Position 3 Growth stocks that have fallen more than 50% are buys in January 2023 appeared first Motley Fool Canada.

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*Returns through 1/9/23

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Fool Contributor Rajeev Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Docebo and Lightspeed Commerce. A motley fool Disclosure Policy.


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