HEO and WE: Are these Canadian growth stocks under $5 a buy?

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HEO and WE: Are these Canadian growth stocks under $5 a buy?

 HEO and WE: Are these Canadian growth stocks under $5 a buy?
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Highlights

  • H2O Innovation saw its total revenues rise 32.6 per cent year-over-year in Q3 FY2022
  • Wecommerce approximately doubled its revenue in Q1 FY2022
  • Wecommerce reported a net profit of C$ 0.79 million in Q1 2022

Growth stocks can be a tough choice to make in the current market scenario amid rising economic concerns. However, high-risk investors can currently find quality growth stocks at bargain prices for the long term. Investors seeking capital gains in the long run can consider discounted Canadian growth stocks like H2O Innovation (TSX: HEO) and Wecommerce (TSXV: WE).

These growth-focused companies are known to have high price-to-earnings (P/E) ratio (which indicates overvaluation) and are generally known to reinvest their earnings to grow at a faster pace than the overall market.

So, let us talk about these under-C$ 5 growth stocks and discuss their financial and stock performances.

H2O Innovation Inc (TSX: HEO)

H2O Innovation is a Canadian firm that leverages its membrane filtration technology to facilitate water treatment solutions and services. The utility provider recorded a P/E ratio of 68.6.

HEO saw its total revenues reach C$ 51.91 million in Q3 FY2022, a year-over-year (YoY) rise of 32.6 per cent, including organic revenue growth of 15.3 per cent and acquisition growth of 17.3 per cent. The C$ 172-million market cap company posted a net profit of C$ 1.33 million in the latest quarter, up by 2.6 per cent YoY.

The HEO stock climbed almost eight per cent month-to-date (MTD). According to Refinitiv data, HEO stocks had a Relative Strength Index (RSI) value of 48.34 on July 26, pointing to a moderate trend.

HEO and WE: Are these under $5 Canadian growth stocks a buy?

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Wecommerce Holdings Ltd (TSXV: WE)

Wecommerce is a junior technology company that offers e-commerce enablement software and tools. The eCommerce enabler approximately doubled its revenue to C$ 12.09 million in Q1 FY2022, relative to C$ 6.03 million in the same period of 2021.

The software company significantly improved its profitability and reported a net profit of C$ 0.79 million in the latest quarter, higher than a loss of C$ 1.75 million in Q1 2021. This increase in net profit came despite an increased operating loss of C$ 1.27 million in Q1 2022 compared to C$ 0.13 million a year ago.

The WE stock plummeted by nearly 75 per cent in 12 months. As per Refinitiv findings, WE stocks were in the oversold territory with an RSI value of 30.85 on July 26.

Bottomline

The Canadian stocks mentioned above could widen one's exposure to the defensive utility sector and the growing e-commerce industry. Considering their market capitalization and increasing revenue and net profits in their latest quarter, these under C$ 5 stocks could significantly grow in the future.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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