Top 3 Growth Stocks in Canada to Watch in January 2024

As we step into 2024, identifying stocks with the potential for robust returns over the coming years becomes crucial. While uncertainties abound, selecting quality stocks from steadily growing companies, including those listed on the Toronto Stock Exchange (TSX), can position investors for strong, if not market-beating, returns over the long term. Here are three compelling TSX growth stock picks for consideration in January 2024, with a focus on opportunities within the TSX for a diversified investment approach. 

1. Enghouse Systems (TSX: ENGH)

Key Highlights: 

• Enghouse Systems, a former growth star in Canada, provides communication software that experienced a surge during the pandemic. 
• While recent growth has tempered, the stock holds potential for a turnaround, especially given its cash-rich balance sheet of around $240 million. 
• Enghouse, known for growth through acquisitions, is well-positioned for opportunities in 2024, particularly as distressed communication businesses may become targets. 
• Trading at its lowest price-to-free cash flow valuation in years, with a near 8% free cash flow yield and a 2.5% dividend yield, ENGH could be an attractive option for patient investors awaiting a potential growth resurgence. 

2. Propel Holdings (TSX:PRL)

Key Highlights: 

• Market Cap: $445 million 
• Propel Holdings, a relatively recent addition to the TSX after its IPO in late 2021, operates primarily in the U.S., offering sub-prime lending products. 
• The company employs AI in its lending-as-a-service platform, enabling the underwriting of loans with lower risk compared to many other lenders. 
• Propel has shown promising growth, boasting a three-year compounded annual growth rate (CAGR) of 49% for revenues and 70% for earnings per share. 
• Despite a solid run-up in 2023, the stock remains attractive, trading at 14 times earnings, and offers a 3.2% dividend yield. 

3. TerraVest Industries (TSX:TVK)

Key Highlights: 

• TerraVest Industries operates a diverse range of industrial businesses focused on energy services, tank manufacturing, heating/cooling, and specialized transport. 
• The company's strength lies in smart capital allocation and operational excellence, evidenced by a five-year CAGR of 20% for revenues and 21% for earnings per share. 

• With a P/E ratio of 16 and a 1.4% dividend yield, TerraVest Industries presents an appealing investment opportunity. 

In summary, Propel Holdings, TerraVest Industries, and Enghouse Systems offer diverse growth opportunities across financial, industrial, and technology sectors, respectively. These stocks present compelling cases for investors seeking long-term growth in their portfolios in 2024 and beyond.