The Bank of Canada recently began cutting interest rates as early signs of easing inflationary pressures emerge, fueling a robust stock market rally in 2024. This favourable economic environment has propelled the TSX Composite Index to impressive year-to-date gains of 22.3%. While some uncertainty about the central bank's next monetary moves lingers, one thing is clear: lower interest rates and cooling inflation could create the perfect conditions for growth-oriented companies to thrive in 2025.
In this article, I'll highlight two top Canadian growth stocks that are well-positioned to skyrocket in the next 12 months, driven by their company-specific fundamentals and strong market trends.
goeasy stock
goeasy (TSX:GSY) is the first growth stock that I believe could stand out as a big gainer in the next year. This Canadian financial services provider mainly focuses on giving non-prime borrowers access to loans and leasing services through its easyfinancial and easyhome divisions. It currently has a market cap of $2.8 billion as its stock trades at $166.50 per share after rising by 12.3% over the last year.
Although GSY stock has underperformed the broader market so far in 2024, the ongoing strength in the Mississauga-headquartered firm's strong financials suggests that it could soon catch up or even outperform. In the third quarter, goeasy's loan originations climbed 16% YoY (year-over-year) to a record of $839 million with the help of a 22% jump in credit applications. This growth pushed its total loan portfolio to $4.39 billion, marking an impressive 28% surge from a year ago.
Last quarter, goeasy achieved a record operating margin of 41.7%, up from 39.3% a year ago, as its profitability continues to improve. In addition, the company's automotive financing segment is gaining traction, with originations for the segment up 60% YoY in the latest quarter.
As lower interest rates begin to make borrowing more attractive in the next year, goeasy could benefit from the increasing demand for credit. Moreover, its strategic focus on secured loans, which now comprise 45% of its total portfolio, adds an extra layer of strength to its business and makes it a top growth stock in Canada to buy now.
OpenText stock
Just like GSY stock, OpenText (TSX:OTEX) hasn't seen much appreciation of late. In fact, OTEX stock has dived by 22.3% so far this year to currently trade at $43.28 per share with a market cap of $11.5 billion due mainly to recent weakness in its sales growth trends.
In the quarter ended in September 2024, OpenText registered an 11% YoY decline in total revenue to US$1.3 billion. However, after adjusting for the divestiture of its Application Modernization and Connectivity division, this decline narrows significantly to just 1.8% YoY. This fact clearly reflects that much of the drop in OpenText's latest quarterly revenues could be attributed to one-time factors rather than its operational inefficiencies. In addition, OpenText's cloud revenues in the September quarter grew by 1.3% YoY, posting the 15th consecutive quarter of organic cloud growth.
Another major factor that makes OpenText so attractive for long-term investors is its increasing focus on innovation, especially in artificial intelligence, cloud technologies, and cybersecurity. As these areas are expected to drive massive growth in the tech sector in the coming years, OpenText stock could recover sharply.
