NVEI:CC - Before the Bull Market: 1 Super Stock Down 38% to Buy on the TSX Today
2023-10-12 16:00:00 ET
The Canadian stock market has been turbulent lately, which is making investors nervous, especially the ones who are new to stock investing. After rallying by 3.7% in the March 2023 quarter, the TSX Composite benchmark has slipped by 2.2% since then, as persistently high inflation and rapidly rising interest rates have reignited fears of a moderate recession in the near term.
Nonetheless, we shouldn’t forget the fact that every bear market eventually turns into a bull market as soon as the macroeconomic environment improves. Considering that, temporary declines in some fundamentally strong growth stocks could be an opportunity for long-term investors to buy them at a big bargain.
In this article, I’ll highlight a TSX super-growth stock that looks undervalued in October 2023 after diving by about 38% on a year-to-date basis.
A beaten-down super stock to buy in the TSX today
Whether you are investing in a dividend stock or a growth stock, you should never forget to carefully analyze its financial growth trends. In addition to its existing growth trends, the demand outlook for a company’s products and services can also tell you a lot about in which direction its stock price might trend in the long term.
Keeping these guidelines in mind, Nuvei ( TSX:NVEI ) could be a really attractive, high-growth stock to consider buying on the TSX today with huge long-term upside potential. If you don’t know about it already, it’s a Canadian company based in Montréal that primarily focuses on providing quality digital payment technology solutions to merchants globally.
The company currently has a market cap of $3 billion, as NVEI stock trades at $21.52 per share after losing nearly 61% of its value in the last six months, bringing its year-to-date losses to 37.5%. In comparison, the TSX Composite Index fell 3.7% in the last six months.
Strong growth trends and long-term outlook
The sales growth rate is considered more important than any other financial metric for a growth company. This is because consistently strong top-line growth usually gives a company a stable financial base to improve profitability in the future.
On this parameter, Nuvei’s growth trends won’t disappoint you. Despite facing high inflationary pressures and a tough consumer spending environment, the company’s revenue in the two years between 2020 and 2022 jumped by about 125%. Its adjusted annual earnings in these two years witnessed an outstanding, slightly more than 121% positive growth. Similarly, Nuvei’s adjusted net profit margin expanded significantly from 23.7% in 2020 to 31.9% in 2022.
In the first half of 2023, Nuvei registered 23.3% YoY (year-over-year) revenue growth to US$563.5 million. Street analysts expect the company’s top-line growth rate to improve further in the year’s second half, with their full-year 2023 revenue estimates suggesting a 45.7% YoY increase.
These solid growth trends and consistently rising demand for Nuvei’s advanced payment solutions amid growing global digital transformation make this Canadian growth stock look highly undervalued to buy on the TSX today.
The post Before the Bull Market: 1 Super Stock Down 38% to Buy on the TSX Today appeared first on The Motley Fool Canada .
The Motley Fool has positions in and recommends Nuvei. The Motley Fool has a disclosure policy . Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.
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