NVEI:CC - My 3 Favourite TSX Mid-Cap Stocks for November 2023
2023-11-16 10:30:00 ET
Mid-cap companies will have a market capitalization between $2 billion and $10 billion. These companies offer higher growth prospects than large-cap stocks and are less riskier than small-cap stocks. So, investors can enjoy the best of both worlds. With the equity markets on the upward momentum this month, here are three top mid-cap stocks you can buy right now.
Nuvei
Nuvei ( TSX:NVEI ), a Canadian payment processing company, has witnessed strong buying this month. Its impressive third-quarter performance and raising of management’s guidance for this year have improved investors’ confidence, driving its stock price. The company trades around 42% higher month to date but is down 53.5% from its 52-week highs. Also, its valuation looks cheaper, with the company trading at 10 times analysts’ projected earnings for the next four quarters.
Meanwhile, the growing popularity of digital payments has created a multi-year growth potential for Nuvei. The fintech company continues to develop innovative products and expand its geographical footprint to win new customers and drive its financials. The opening of a new office in Shanghai, China, could allow the company to strengthen its presence in the Asia-Pacific region. Also, it is expanding its alternative payment method portfolio to aid its partners in efficiently reaching their customers.
Amid the growing addressable markets and its growth initiatives, Nuvei’s management projects its revenue to grow at an annualized rate of 15-20% in the medium term while reaching an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin of 50% in the long run. So, I believe the uptrend in Nuvei will continue.
goeasy
My second pick is goeasy ( TSX:GSY ). The subprime lender generated a record loan originations of $722 million amid growing demand across its products and acquisition channels. Higher loan originations expanded its loan portfolio by 33% to $3.43 billion at the end of the third quarter. The growth in consumer loans grew its revenue and adjusted EPS (earnings per share) by 23% and 29%, respectively.
Also, during the quarter, the company’s net charge-off rate improved from 9.3% to 8.8%, closer to the lower end of the company’s guidance of 8.5%-9.5%. The improvement in the credit and product mix of its loan portfolio and credit and underwriting enhancements led to a decline in its net charge-off rate. Meanwhile, its efficiency ratio improved 400 basis points to a record 28.6%. Further, the company’s management has reaffirmed its earlier provided guidance for the next three years. The company also offers a healthy dividend yield of 3.1% and trades at a cheaper next 12-month price-to-earnings multiple of 7.5, making it an attractive buy.
Capital Power
My third pick is Capital Power ( TSX:CPX ), a power-producing company that operates 29 renewable and thermal power-generation facilities with a total power production capacity of 7.5 gigawatts. Earlier this month, the company posted its third-quarter performance, with its revenue and adjusted EBITDA growing by 46.3% and 7%, respectively. Its power production also increased by 22% compared to the previous year’s quarter.
Further, the company has agreed to acquire a 50.15% stake in Frederickson 1 Generating Station, a 265-megawatt natural gas-fired power generating facility, from Atlantic Power & Utilities for $137 million. It has a solid pipeline of projects, including 4.2 gigawatts of near-term growth projects in western Canada, Ontario, North Carolina, and MISO (Midcontinent Independent System Operator) markets. Further, it could also benefit from the increased transition towards clean energy.
Supported by its solid cash flows, Capital Power has raised its quarterly dividends for 10 consecutive years, with its forward yield currently at 6.25%. The company’s management is confident of increasing its dividends at an annualized rate of 6% through 2025. Considering all these factors, I believe Capital Power is an excellent buy.
The post My 3 Favourite TSX Mid-Cap Stocks for November 2023 appeared first on The Motley Fool Canada .
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nuvei. The Motley Fool has a disclosure policy .
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