In the turbulent opening weeks of 2022, rising interest rates and monetary tightening sent growth stocks into a prolonged decline, stripping away valuations that had once seemed impervious to gravity. Yet where markets see wreckage, patient capital has historically found opportunity — and three Canadian technology companies, Nuvei, TELUS International, and Enghouse Systems, emerged as candidates for investors willing to hold conviction through uncertainty. The ancient tension between fear and long-horizon thinking was playing out once again, as quality businesses traded at prices the market ha
Three Canadian Growth Stocks Trading at Discounts Offer Buying Opportunities
Buy good things when they're on sale, not when everyone else wants them.
Mark
Why should someone buy a stock that's already down 50 percent? Doesn't that usually mean there's more pain coming?
Mimi
Sometimes, yes. But sometimes it means the market has overreacted to bad news. Nuvei's short report was largely baseless, but the stock fell anyway. If you believe the business is still growing revenues 50 percent a year, then the discount is a gift, not a warning.
Mark
And what about timing? The article says you might need to wait weeks or months. How do you know you're not catching a falling knife?
Mimi
You don't. That's why this strategy only works if you have a long time horizon. If you need the money in a year, don't do this. But if you can hold for five or ten years, short-term timing matters less than buying quality at a discount.
Mark
TELUS International is trading below its IPO price. That's unusual. Does that mean the IPO was overpriced, or does it mean the company is in trouble?
Mimi
Probably the former. The whole growth sector got repriced lower. TELUS is still growing 37 percent in revenue and has real clients like Google. The IPO price was set in a different market. Now you're getting the same company cheaper.
Mark
What's the difference between Enghouse and the other two?
Mimi
Enghouse is slower-growing but more profitable and more stable. It's got $200 million in cash and a history of smart acquisitions. If you want less volatility, Enghouse is the pick. If you want higher upside, Nuvei or TELUS are more interesting.
Mark
So the real bet here is that the market will eventually remember these companies are good?
Mimi
Exactly. You're betting that quality businesses don't stay cheap forever. History suggests you'd be right.
Il Polso
- A perfect storm of rising rates, Omicron anxiety, and a damaging short-seller report drove Nuvei down more than 50% from its peak, erasing billions in market value despite underlying revenue growth exceeding 50% annually.
- TELUS International, barely past its IPO, found itself trading below its debut price — a rare and unsettling signal in a market that had rewarded nearly every new listing for years prior.
- Enghouse, the steadiest of the three, watched pandemic-era tailwinds evaporate as video conferencing demand normalized, leaving the company facing tougher year-over-year comparisons and a slower acquisition pipeline.
- Analysts and long-horizon investors began circling, recognizing that the selloff was driven more by macro fear than by deteriorating business fundamentals.
- The path forward hinges on patience — these stocks may fall further before recovering, but their cash positions, margins, and growth trajectories suggest the discount window may not stay open long.
In the turbulent opening weeks of 2022, rising interest rates and monetary tightening sent growth stocks into a prolonged decline, stripping away valuations that had once seemed impervious to gravity. Yet where markets see wreckage, patient capital has historically found opportunity — and three Canadian technology companies, Nuvei, TELUS International, and Enghouse Systems, emerged as candidates for investors willing to hold conviction through uncertainty. The ancient tension between fear and long-horizon thinking was playing out once again, as quality businesses traded at prices the market had not offered in years.
By early 2022, the growth stock selloff had become something close to indiscriminate. Rising interest rates, tightening monetary policy, and the shadow of Omicron had combined to punish an entire category of equities — not because the underlying businesses had broken down, but because the market's appetite for future earnings had sharply contracted. For investors with a long time horizon and a tolerance for short-term pain, the wreckage offered something rare: the chance to buy quality at a discount.
Nuvei was the most striking example. The payments platform had lost more than half its value since October, largely in response to a short-seller report that most analysts found unconvincing. What the panic obscured was a business growing revenues at over 50% annually since its 2019 IPO, with EBITDA expanding even faster and margins already above 40%. Trading at ten times sales — its lowest multiple since going public — Nuvei wasn't cheap in any absolute sense, but relative to its growth rate, it had rarely looked more accessible.
TELUS International offered a different entry point. The company had gone public only recently and was already trading below its IPO price, an unusual distinction in a market that had rewarded nearly every new listing. Its focus on digital customer experience, artificial intelligence, and data services had attracted clients like Google, Barclays, and Meta — a roster that spoke to genuine enterprise credibility. Revenue, EBITDA, and earnings per share were all on track to grow by at least 30% in 2021, and the structural shift toward digital transformation across industries suggested durable demand ahead.
Enghouse Systems was the most measured of the three — a decade-long compounder with a 21% annual growth rate and a 578% total return to show for it. The post-pandemic normalization of video conferencing demand had slowed its momentum, and elevated tech valuations had made acquisitions harder to justify. But with roughly $200 million in net cash and an enterprise value-to-EBITDA ratio at a five-year low, the company retained both the financial flexibility and the strategic patience to act when conditions improved.
No one could say with certainty when these stocks would find their floor. But the argument for each rested not on timing the market, but on trusting that quality businesses, bought at genuine discounts, tend to reward those willing to wait.
The market had turned brutal for growth stocks by early 2022. Since November, the sector had been in freefall—tightening monetary policy, climbing interest rates, and uncertainty around the Omicron variant had hammered valuations that once seemed untouchable. But in that wreckage lay something investors rarely get: a chance to buy quality companies at a discount.
Warren Buffett's old wisdom applied here as much as anywhere: buy good things when they're on sale. The trick was knowing which companies were genuinely good, and having the stomach to wait for them to recover. For investors with a long time horizon, the math was straightforward. If you picked the right businesses and bought them when the market had lost faith, the upside could be substantial.
Nuvei was the most dramatic case. The payments platform company had cratered more than 50 percent since October after a short-seller report that, by most accounts, didn't hold up to scrutiny. Yet the damage was done. What got lost in the panic was the underlying business: since going public in 2019, Nuvei had grown revenues by more than 50 percent annually, with EBITDA expanding even faster at over 80 percent a year. The company was also getting more efficient—EBITDA margins now exceeded 40 percent, with a long-term target of 50 percent. At ten times sales, it was the cheapest the stock had ever traded since its IPO. That wasn't exactly a bargain-basement valuation, but for a company growing this fast, it was worth a serious look.
TELUS International presented a different kind of opportunity. This recent IPO was trading roughly 10 percent below where it had opened, making it one of the few new public companies that had actually fallen below its debut price. The company had positioned itself as a leader in digital customer experience services, with a particular focus on artificial intelligence and data management. Its client roster—Google, Barclays, Meta Platforms—suggested it was solving real problems for serious customers. In 2021 alone, the company was on track to grow revenues, adjusted EBITDA, and adjusted earnings per share by at least 37, 36, and 30 percent respectively. The pandemic-driven surge in demand for these services would likely moderate, but the broader shift toward digital transformation across industries should provide tailwinds for years to come.
Enghouse Systems was the more measured choice of the three. Over the past decade, this company had delivered a compounded annual growth rate of 21 percent—a 578 percent total return. It had ridden a wave of demand for video conferencing in 2020, but that demand had normalized in 2021, leaving the company to face tougher comparisons. Higher valuations across tech had also slowed its acquisition pace. Yet Enghouse remained highly profitable and was exploring new organic growth channels. With roughly $200 million in net cash on the balance sheet and an enterprise value-to-EBITDA ratio of 13—the lowest in five years—the company had room to make acquisitions if valuations continued to fall. Patience might be required, but if growth momentum returned, the stock could see a sharp rebound.
The honest truth was that no one could predict when these stocks would hit bottom. It could be days or weeks or months. But for investors willing to hold through the volatility and confident in the quality of these businesses, the discounts being offered in early 2022 represented the kind of opportunity that didn't come around often.
Citazioni salienti
Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.— Warren Buffett
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