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“The stock market is a device to transfer money from the impatient to the patient.” Warren Buffett’s quote highlights the importance of having a long-term mindset when investing. With this in mind, let’s look at two TSX growth stocks to buy and hold with patience.
Well Health Technologies: A Rapidly Growing TSX Stock
The first TSX stock worth considering for a buy-and-hold strategy is Well Health Technologies Corp. (TSX:WELL). This company has shown impressive growth over the years. Well Health went public in 2017, and by 2023, it posted annual revenue of $776 million and net income of $16.6 million.
Looking ahead, management expects fiscal 2024 revenue to be between $960 and $980 million, representing a growth rate of 23.7% to 26.3%. Earnings per share (EPS) are projected to reach $0.17, a significant improvement from a net loss in 2023. Over the next five years, management anticipates rapid growth driven by the ongoing digitization of the healthcare system.
Despite this growth, Well Health stock remains below $5 on the TSX. This undervaluation can be attributed to the company's relative infancy. However, a longer-term perspective reveals strong revenue growth, accelerating earnings, and increasing cash flow. Shareholders will benefit from decreasing share-based compensation and increasing share buybacks. This new era of sustained cash flow growth and dilution reversal underpins an optimistic outlook for Well Health stock.
Ballard Power Systems: A High-Potential but Riskier Play
The next stock to consider is Ballard Power Systems Inc. (TSX:BLDP). Although Ballard has been around for decades and has struggled to make a profit, its significant potential remains intriguing.
Ballard’s opportunity lies in two key areas: the first is the potential of fuel cells to replace gasoline engines in heavy-duty vehicles such as buses, trains, trucks, and marine vessels. While most of these verticals are in early stages, the bus segment is growing rapidly, with revenue increasing 206% to $8.9 million in the latest quarter.
The second opportunity is in using fuel cells to power data centres and other stationary facilities. In the first quarter, revenue from the stationary segment grew by 48% to $3.7 million. Although this segment is still small, its potential is expanding. Recently, Ballard announced a strategic technology partnership with Vertiv, a global provider of digital infrastructure, focusing on backup power applications for data centres and critical infrastructure.
To understand the full scope of Ballard’s emerging opportunity, examining backlog and orders is essential. In the last quarter, backlog increased 38% sequentially to $180.5 million, with record new orders of $130 million in the past two quarters.
As of the end of the first quarter, Ballard has approximately 1,200 fuel cell engine orders in Europe and North America, with management projecting this to triple in the next 2 to 3 years. There are currently about 600 fuel cell buses in Europe and North America, with management expecting this number to grow into the thousands over the next 3 to 4 years.
The Bottom Line
A long-term mindset is crucial for avoiding the distractions of short-term market noise. This noise can lead investors to make poor decisions, negatively impacting returns and wealth. The TSX stocks discussed here, Well Health Technologies and Ballard Power Systems, have their fair share of short-term noise. However, those who ignore this noise and hold these stocks for the next 10 years are likely to benefit from significant shareholder wealth creation.
