5i Stock Screener: Growth Stocks on Sale

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With the rotation from growth to value stocks in the market seemingly cooling down, we thought it would be worth finding some stocks that have been hit hard by broad market swings while still showing good fundamentals and growth potential.

To find these companies, we screened for stocks that are trading at least 20% below their 52-week highs with expected earnings per share (EPS) growth expected to be greater than 25% over the next year. This should allow us to find companies for which the consensus is that recent market volatility or drop in price does not significantly affect near growth expectations for earnings. This also allows us to identify potential growth companies at a bargain. Another important criterion we thought was worth adding here was five-year revenue growth averaging more than 10% annually. This can be a signal that a business has been growing at a good pace (double digits) for a decent amount of time and with a proven product or service. 

Readers might even see a few names they have added to their watchlists upon observing strong price action over the last few months but were reluctant to buy at steep valuations.

The screen pulls up 22 names in Canada that have a market cap of at least $100 million in market cap to filter out smaller speculative stocks that are generally more vulnerable to market volatility. Here is a summary of the criteria followed by the list of stocks:

  • Trading at least 20% below 52-week high
  • Expected 1yr EPS growth of greater than 25%
  • 5-year annual revenue growth of more than 10%
  • Market cap of at least $100 million

 

Ticker Short Name Forward P/E Sector Market Cap ($M) % Below 52 Wk High 1 YR EPS Growth Est. 5 Yr Revenue CAGR
KXS KINAXIS INC 167.18 Information Technology  $      4,332.79 -29% 209.09 17.83
WDO WESDOME GOLD MIN 13.37 Materials  $      1,373.21 -34% 200.00 15.41
CG CENTERRA GOLD IN 4.45 Materials  $      3,485.19 -40% 143.61 21.13
FR FIRST MAJESTIC S 34.86 Materials  $      4,703.03 -36% 125.00 12.14
FVI FORTUNA SILVER 8.87 Materials  $      1,781.17 -23% 124.39 22.83
PAAS PAN AMER SILVER 17.22 Materials  $      8,978.17 -20% 119.95 21.44
AT ACUITYADS HOLDIN 56.43 Communication Services  $         738.00 -58% 100.00 35.80
APHA APHRIA INC   Health Care  $      5,385.52 -58% 77.12 124.74
WPRT  WESTPORT FUEL SY 85.37 Industrials  $      1,173.91 -53% 76.19 27.29
OGI ORGANIGRAM HOLDI   Health Care  $         908.76 -68% 68.42 59.34
REAL REAL MATTERS INC 18.14 Real Estate  $      1,373.84 -50% 66.67 22.01
BTO B2GOLD CORP 10.04 Materials  $      6,573.01 -38% 56.48 28.10
TCS TECSYS INC 75.22 Information Technology  $         643.70 -33% 50.00 15.37
WEED CANOPY GROWTH CO   Health Care  $    13,123.51 -52% 49.67 112.98
MAV MAV BEAUTY BRAND 11.92 Consumer Staples  $         207.35 -23% 46.67 24.15
SMT SIERRA METALS IN 7.40 Materials  $         605.66 -24% 45.37 24.95
K KINROSS GOLD 9.57 Materials  $    11,776.10 -31% 34.25 11.10
CJT CARGOJET INC 35.90 Industrials  $      3,110.02 -29% 28.77 17.27
KL KIRKLAND LAKE GO 9.96 Materials  $    12,470.01 -39% 28.52 63.95
AEM AGNICO EAGLE MIN 19.33 Materials  $    19,320.29 -32% 25.92 13.97
EDV  ENDEAVOUR MINING 8.80 Materials  $      7,177.13 -27% 51.71 32.10
AR ARGONAUT GOLD IN 6.53 Materials  $         814.29 -22% 40.00 25.80

Upon a quick glance at the list, it is quite easy to see a large number of stocks in the precious metal mining sectors (12 to be exact). Many of these have seen a drop in price along with gold and silver prices. Of course, commodity exposure is always a risk one takes when investing in precious metal miners and producers. Additionally, positive economic sentiment generally goes against precious metals which usually do well during times of uncertainty. For investors looking to add precious metals for diversification, it is worth considering having more promising names in a portfolio. 

Of interest, we think Kirkland Lake (KL) is a good candidate trading at a cheap valuation of 10x forward earnings, with an impressive five-year revenue CAGR of 63% and earnings expected to grow by 27% next year. Another name worth noting in the silver space is Pan America Silver (PAAS) which is expected to see earnings grow at 120% next year and has a decent five-year revenue CAGR of 21%. 

Shifting over to the technology sector we see one of our long time favourites: Kinaxis (KXS). This is an example of a company that has typically traded at a rich valuation (typically around the 15x sales range) but has been justified, in our view, by impressive recurring revenues and growth and a strong player in the global supply chain software space. Shares are still on the expensive side at a 167x earnings multiple, but worth considering after being down nearly 30% from recent 52-week highs and an expected earnings growth of 209% over the next year.

Another name that has been on our radar for some time is Acuity Holdings (AT). Shares recently saw a sharp decline along with US peers in digital advertising solutions. However, the company has seen impressive growth and interestingly ranks in the top seven in this list for each EPS growth, five-year revenue CAGR and how much of a ‘discount’ to 52 week highs it is at. This could a good name to consider for those looking for growth in Canadian tech.

It is possible that there is a good reason why some of these names have seen a price drop (eg. change in other fundamental metrics or increased competition), which is why it is important for investors to always look at an individual stock closely before investing. This list is by no means an endorsement for each stock shown, but we would consider this a good place to start for investors looking for growth stocks on sale. 

Remember to always do your research,

Moez Signature