Two Canadian Growth Stocks Poised for 20%+ Earnings Growth Despite Recession Fears

The stock market has been brutal to growth companies this year. Inflation is climbing, recession talk is filling the air, and Canadian equities—especially the ones that were supposed to deliver big returns—have taken a beating. The TSX has seen valuations collapse across the board, and with them, the earnings forecasts that once looked so promising. Yet even in this environment of caution and retreat, there are pockets of genuine opportunity: companies that have been hammered by the broader selloff but whose underlying businesses remain sound, and whose earnings are still expected to accelerate significantly in 2023.

WELL Health Technologies is one such company. The Toronto-listed healthcare platform has assembled an unusual portfolio over the past few years—physical clinics, telehealth applications, digital health services—mostly through acquisition, but with a disciplined eye for quality assets that could grow on their own. Because healthcare operates in a defensive corner of the economy, WELL's various holdings face fewer obstacles to growth even if the broader economy stumbles. The numbers tell the story: the company pulled in $302 million in revenue last year. Analysts expect that to nearly double to around $525 million this year, with earnings per share hitting $0.20. For 2023, the consensus calls for another 10% in revenue growth, but earnings per share is projected to jump to $0.26—a gain of more than 31%. Yet the stock has been punished relentlessly. It's trading more than two-thirds below its all-time high of $9.34, and despite analyst price targets that sit more than 200% above current levels, it remains largely ignored.

Cineplex tells a different kind of recovery story. The movie theater operator was among the hardest hit by the pandemic. For over a year, the company watched helplessly as provinces locked down indoor gathering spaces and the film industry ground to a halt. Now, with restrictions lifted and audiences hungry for the theatrical experience again, Cineplex stands at an inflection point. The numbers are striking: revenue is expected to surge more than 120% this year to roughly $1.46 billion, and the company is projected to return to profitability with earnings per share of $0.34—the first positive year since 2019. But the real story is 2023. While revenue is expected to grow another 10% as operations normalize, earnings per share is forecast to climb to $1.10, representing a gain of more than 200% from this year's expected level. That kind of earnings acceleration, driven by pent-up consumer demand and operational leverage, is rare in any market environment.

Both companies share a common thread: they've been marked down so severely that the gap between where they trade and where analysts believe they should trade has become enormous. WELL and Cineplex are not speculative bets on unproven technologies or uncertain markets. They are established businesses with real assets, real customers, and real earnings power—now available at prices that reflect panic rather than fundamentals. Whether the recession fears materialize or the economy muddles through, these two stocks have already absorbed much of the bad news. If the earnings projections hold, the upside from here could be substantial.