Growth investing is one of the lucrative strategies for buying stocks. The primary focus is on capital gains or price appreciation, and growth stocks with visible strong upside potential are the investment options. The TSX has several candidates for a multibagger, but there are currently two price-friendly, if not ridiculously cheap, options.
Payfare (TSX:PAY) and Healwell AI (TSX:AIDX) could see even higher share price gains than their current share prices in their respective sectors. The former is geared towards a rapidly growing next-generation workforce, while the latter aims to provide precise diagnoses and treatment plans in the healthcare sector.
Financial technology
Payfare empowers the next generation of workers in the gig economy. The $357.7 million financial technology company’s platform provides gig workers with mobile banking and instant payment solutions, including loyalty rewards.
In addition, the fintech cooperates with leading gig platforms such as DoorDash, LyftAnd Above to optimize employee payouts. The current share price is USD 7.35 (+18.4% year-to-date), while the average price target of market analysts for the last 12 months is USD 11.33 (+54.2%).
Business is thriving, as evidenced by Payfare’s latest quarterly results. In the three months ended June 30, 2024, revenue rose 20.4% year-on-year to a record $56 million. Net profit rose 131.6% year-on-year to $4.9 million, while in the first half of the year, profits rose 194% year-on-year to $10 million.
According to management, Payfare generates about 70 to 80 percent of its revenue from interchange fees charged by payment networks. The rest, 20 to 30 percent, comes from users’ banking fees, such as for ATM withdrawals, money transfers and foreign currency exchange.
Payfare also incurs little to no marketing costs as gig platforms initiate invitations to gig workers or market Payfare’s products and services. Since Q1 2021, the number of active users has grown exponentially from 146,842 to 1,468,770 in Q2 2024 (900.24%).
The fintech funds its growth goals through internally generated free cash flow (FCF). At the end of the quarter, FCF of $9.6 million is 4,700% higher than the same period in 2023. Notably, Payfare has no debt. Management added that the sixth consecutive quarter of positive earnings in the second quarter of 2024 indicates consistent profitability.
In early March this year, Uber announced the launch of the Uber Pro Card in Canada in partnership with Payfare and MasterCardOn July 25, 2024, Payfare signed a long-term contract extension with Lyft to ensure continued cooperation and future product improvements.
Health technology
Healwell AI continues to deliver astronomical returns in 2024. At just $1.93 per share, current investors are making a year-to-date gain of 157.3%. If you had invested $5,000 at the end of 2023, your money would be worth $12,866.67 today. Market analysts recommend a strong buy rating and predict a 91.2% upside potential in one year.
The $322.6 million healthcare technology company believes that artificial intelligence (AI) can help make healthcare more predictive and proactive. Healwell uses AI to analyze large amounts of data and develop improved recommendations for patient care.
Due to organic growth, strategic mergers and a robust acquisition pipeline, Dr. Alexander Dobranowski, CEO of Healwell, expects that current revenue of over $20 million will soon exceed the $40 million mark per year.
Strong Buys
Payfare and Healwell AI are buying opportunities due to their low prices relative to their visible and enormous growth potential.
