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The equity market is going through a roller coaster ride amid fears over rising interest rates, high inflation, and the announcement by OPEC+ (Organization of the Petroleum Exporting Countries) to cut their supplies by 2 million barrels per day from November.
On Friday, the Bureau of Labor Statistics announced that the unemployment rate fell to 3.5%, a multi-decade low. Although a low unemployment rate is good news for the markets, investors fear it could prompt the Federal Reserve to continue with its aggressive rate hikes.
In this uncertain environment, the following two TSX stocks have witnessed substantial selling, thus dragging their valuations down to attractive levels. So, if you’re a long-term investor, these two high-growth stocks could be excellent additions to your portfolios.
WELL Health Technologies
WELL Health Technologies (TSX:WELL) is a digital healthcare company that facilitates virtual care and digital patient engagement through its innovative platform. Amid fears of slowed growth due to the reopening of the economy and general weakness in growth stocks due to rising interest rates, the company’s stock price has fallen substantially over the last few months. Currently, the company trades over 60% lower than its 52-week high, while its NTM (next 12 months) price-to-earnings stand at 10.5, lower than its historical average.
Meanwhile, WELL Health has continued to deliver solid financials irrespective of the challenges. In the recently reported second-quarter earnings, the company’s revenue grew by 127% to $140.3 million amid solid organic growth. Supported by impressive operating performances across its business verticals, the company recorded over 1.16 million patient visits during the quarter. Along with topline growth, the company’s bottom line also expanded, with its adjusted net income coming in at $17.2 million compared to an adjusted net loss of $1.2 million in the previous year’s quarter.
After reporting a solid second-quarter performance, WELL Health’s management has raised its 2022 revenue guidance by $25 million to $550 million. The growing adoption of tele-healthcare services, technological advancements, and geographical expansion could support the company’s growth. Besides, the company’s management expects its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to cross $100 million this year. So, given its high-growth prospects and cheaper valuation, I expect WELL Health’s stock price to double over the next three years.
Nuvei (TSX:NVEI)(NASDAQ:NVEI) is another stock that has witnessed substantial selling in the last few months, with its stock price falling by 76% compared to its 52-week high. After reporting better-than-expected second-quarter earnings, the company’s management lowered its guidance for this year amid the challenging environment. The lowered guidance and weakness in the tech sector appear to have led to a steep correction in the company’s stock price. Meanwhile, the selloff has dragged the company’s NTM price-to-earnings down to an attractive 15.1.
It’s worth noting that Nuvei has kept its medium-to-long-term guidance unchanged. The increased adoption of digital payments is expanding the company’s addressable market. Meanwhile, Nuvei is working on developing innovative product offerings, expanding its market, and adding new APMs (alternative payment methods) to drive growth.
Its regulated online gaming vertical is growing at a healthy pace, with its revenue run rate currently at $25 million. And company management anticipates this vertical’s annual revenue run rate to soon reach $100 million. So, considering its growth prospects, improving profitability, and attractive valuation, I expect Nuvei to deliver solid returns over the next three years.
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