Don’t let the recent bout of volatility get you down. You want the markets to be choppy because those are the times when the market experiences a temporary bout of inefficiency, allowing individual stock pickers like you and me an opportunity to nab a stock that’s priced at a discount to its intrinsic value. In other words, in times like these, when the markets fluctuate up and down by double digits when we have a greater probability of buying a stock that’ll offer us excess risk-adjusted returns or market-beating returns for a lower degree of risk.
Of course, you’ll need to stomach to ride the waves in the short term! And as a Foolish investor, hopefully, your stomach has strengthened over the past few months. Without further ado, here are two severely mispriced growth stocks that could help your TFSA swell past the $1 million milestones at some point over the next two decades.
Solium Capital (TSX:SUM) Just shy of the $700 million market cap mark, Solium is one of the best under-the-radar stocks that you’ve likely never heard of. The company is in the business of software-as-a-service (SaaS) solutions dealing with employee stock options and cap tables.
Option-based compensation packages give employees the incentive to hit near- to medium-term goals, and that’s a significant reason why the business world is in dire need of employee stock option management systems to streamline a seemingly tedious and messy process.
Over the years, Solium has scooped up various businesses to bolster its platform further. And with a specific niche segment of the market being focused on, I believe Solium is in a terrific position to experience exponential growth as almost any business from across the globe would likely find Solium’s solutions a time saver.
As of October 2017, the Globe and Mail noted that the firm has around 3,000 clients. With SaaS and cloud firms riding on a secular uptrend, there’s no question that Solium could grow to become a story that both Canadian and American investors will be talking about frequently.
Spin Master (TSX:TOY) This very well may be one of the most misunderstood stocks on the TSX. On the surface, it’s a simple toy company in an incredibly cyclical and seasonal industry that one would expect would be very sensitive to the state of the economy.
Over the last few months, Spin Master has sold off, partially due to temporary dents in the armour due to the Toys “R” Us bankruptcy south of the border, but also because the appetite for growth stocks and discretionary names has dropped like a stone amid the recent growth-to-value, growth-to-cash rotation.
Given the catalysts in store for 2019, most notably the global expansion horizon, I think Spin Master is an absolute steal. You’re paying a quarter to get a toonie here, yet most investors would rather take a wait-and-see approach. Unfortunately, such a plan will cause one to miss out of a majority of the potential gains that may arise from a sharp upward correction that may be triggered by a blowout quarterly report.
The gloom just isn’t warranted, especially given the company’s track record of releasing award-winning products out of a pipeline that could realistically be one of the most robust in the entire toy industry. So, if you’ve got the cash in your TFSA, you should probably buy shares and forget you own them for the next decade.
Stay hungry. Stay Foolish.
Fool contributor Joey Frenette owns shares of Spin Master. The Motley Fool owns shares of Spin Master. Solium and Spin Master are recommendations of Stock Advisor Canada.