Aside from the mega-cap tech stocks that most investors are well aware of, there are a number of under-the-radar growth stocks that I have long thought are worth considering for investors looking for growth outside the US market.
Indeed, the Canadian market offers investors a plethora of fantastic, high-quality companies to choose from. However, due to the location of these companies, it is often the case that a lack of analyst coverage and investor interest can lead to larger-than-usual valuation gaps that long-term investors can benefit from.
With that in mind, here are two of my top ideas for investors currently considering Canadian growth stocks.
Kinaxis
Canadian supply chain management company Kinaxis (TSX:KXS) remains a top growth stock that many Canadian investors may be aware of. But outside the company’s jurisdiction, this is an AI stock that is certainly flying under the radar, given Kinaxis’ current valuation.
The company has a relatively attractive price-to-earnings ratio of around 30 times. Impressively, this multiple comes as the company’s revenue rose 15% year-over-year, while profits in its SaaS division grew a whopping 437%.
As a major player in software as a service (SaaS), Kinaxis will be able to benefit from relatively higher margins in addition to more scalable and reliable growth. The company has seen its customer base continue to grow, and this growth rate deserves a much higher multiple, at least in my opinion.
Investors looking for growth at a reasonable price therefore certainly have a research-worthy choice in Kinaxis at the current level.
One of the most intriguing under-the-radar small-cap stocks Canada has to offer The Metal Company (NASDAQ:TMC).
This deep-sea mining company has definitely seen its stock price skyrocket, largely due to commentary surrounding the U.S. focus on critical minerals (rare earths and other essential minerals used in battery development), in addition to some intriguing prospects for Canadian companies to benefit from rising U.S. investment in these geopolitically important assets.
Coincidentally, TMC is one of the best positioned companies in the emerging deep sea mining industry to supply international markets such as the US with the key minerals needed for growth. As such, investors are now clearly pricing in a much higher probability of further permits being approved, and the company’s cash flow generating potential has clearly been highlighted.
I’ve been bullish on this stock for a long time, back when it was hovering in penny stock territory. However, now that it’s trading around $10 per share, this is a stock that I think now has the momentum that some new investors can get behind. In other words, I think it’s far too late to say the rally in TMC stock is over. In fact, I think this is just the beginning considering the potential benefits of this business.
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