5 Canadian growth stocks to buy & hold forever

Highlights

  • One of the companies listed below acquired sports company Futbol Sites to further strengthen its growth potential.
  • One of the mentioned companies achieved an improved rating of “A” with regards to adherence to environmental, social and governance (ESG) norms.
  • The highest ROE was nearly 5,529 per cent, and the highest one-year stock return was 454 per cent in this list.

The S&P/TSX Composite Index, with an average market capitalization of C$ 13.04 billion, posted a Year-to-Date (YTD) return of 19.35 per cent. In contrast, Emerita Resource Corp (EMO), one of the growth companies discussed in this article, posted the highest YTD return of 781.81 per cent. This growth stock clearly outperformed the index.

Moreover, Emerita Resource also outperformed the S&P/TSX Venture Composite Index that posted a YTD return of 4.36 per cent.

The highest return among these growth stocks was 1,009 per cent in the last nine months, and the highest ROE was 5,529 per cent.

On that note, we shall look into some of these growth stocks to buy and hold long-term, listed on both the Toronto Stock Exchange (TSX) and Toronto Stock Exchange Venture (TSXV).

  1. Playmaker Capital Inc. (TSXV: PMKR)

The company is incorporated as a digital sports company integrating gambling, sports, and technology under one roof. As per the latest quarterly report, Playmaker acquired Futbol Sites, a digital sports media company with more than 10 premium sites.

Playmaker, in the second quarter of the fiscal year 2021, reported revenue of US$ 3 million, increasing from no revenue posted in Q2 FY20. Its cash and cash equivalent was US$ 23.5 million in the latest quarter. The company held a price-to-book (P/B) ratio of 14 on September 8, 2021.

To score an EBITDA target of US$ 2.5 million in each of the next two years, Playmaker acquired Yardbarker, a US sports company, in Q2 FY21.

The stock price of Playmaker Capital ballooned close to 341 per cent on a YTD basis and over the past year. It closed at C$ 0.7 on September 7, 2021.

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  1. Sangoma Technologies Corporation (TSXV: STC)

Sangoma Technologies is a provider of hardware and software components used to assemble an internet protocol system. These systems are used in the telecom sector and also applied in datacom applications.

The earnings per share (EPS) of Sangoma was 0.06, while the return on equity (ROE) was 1.91 per cent, and return on assets (ROA) was 1.2 per cent on September 8, 2021.

The total sales posted by Sangoma was C$ 35.44 million in Q2 FY21, down by two per cent Year-over-Year (YoY). Its EBITDA was C$ 6.63 million in the same quarter.

The company's stock price closed at C$ 3.19 apiece on September 7, 2021, trading 42 per cent above its 52-week low of C$ 2.24. The stock price increased by close to 36 per cent over the past year. 

Also Read: 5 Canadian stocks to buy under $5

  1. Crescent Point Energy Corp. (TSX: CPG)

This dividend-paying oil and gas company is expected to pay quarterly dividends of C$ 0.003 per share on October 1, 2021. The dividend yield was 0.22 per cent, and the company's market cap was C$ 2.59 billion on September 8, 2021.

In Q2 FY21, Crescent Point Energy posted an adjusted fund flow of C$ 387.8 million and its net income in the same quarter was C$ 2.1 billion. The company's average production stood at 148,641 barrels of oil equivalent per day (boe/d) in Q2 FY21.

To mark the commitment of adherence to the environmental, social and governance (ESG) norms, Crescent Point earned an improved credit of “A.”

Over the past year, the stock price of the oil and gas scrip expanded by 113 per cent and closed at C$ 4.46 apiece on September 7. It reached its 52-week high of C$ 5.87 on June 7, 2021.

On the valuation front, the company's EPS was 3.63, ROE was 53.43 per cent, and ROA was 26.94 per cent.

Also Read: 5 top Canadian stocks to hold in your portfolio

  1. Powerband Solutions Inc. (TSXV: PBX)

The technology company develops cloud-based portals used for finance and auction-related activities. These software and cloud-based system improves the efficiency and sales.

Powerband held outstanding shares of 171.57 million and a market cap of C$ 205.88 million on September 8. On this day, the company posted an ROE of nearly 5,529 per cent and held a debt-to-equity (D/E) ratio of 1.08.

On September 8, the stocks of Powerband were priced at C$ 1.2 at the market close. The stocks rocketed by nearly 549 per cent in the last nine months and by 422 per cent roughly over the past year.

The revenue posted by Powerband was C$ 4.71 million in Q2 FY21, up 63 per cent Quarter-on-Quarter (QoQ). Its gross profit was C$ 2.35 million in Q2 FY21.

  1. Emerita Resource Corp. (TSXV: EMO)

The C$ 236.72 million market cap company engages in the activity of exploration of minerals. Emerita Resource develops and acquires minerals ranging from lithium, gold, and zinc.

On September 7, the stock price of Emerita Resource traded 1,392 per cent above its 52-week low of C$ 0.13 (November 9, 2020) and closed at C$ 1.94 on this day. It reached its 52-week high of C$ 2.16 on August 5, 2021.

On a YTD basis, the stock price expanded close to 782 per cent and skyrocketed by 1009 per cent in the last nine months. However, on a quarter-to-date (QTD) basis, the stock price increased by only 33 per cent.

Emerita Resource posted a P/B ratio of 40.4 (at the time of writing). 

Bottom line:

On the backdrop of very high return ratios and growth in the stock price in both the medium and long term, growth stocks look attractive to many investors. However, there is also a higher degree of market volatility inherent in these stocks.

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