However, there are some top Canadian growth stocks that I still think could, in some cases, be a better choice than many of the so-called Magnificent Seven investors who have become accustomed to trading with impunity.
Here are three of the best Canadian growth stocks I currently have on my watchlist.
Shopify
Shopify (TSX:SHOP) remains my top pick for Canadian growth stocks, and that call has paid off quite well, as the chart below shows.
Shopify’s recent performance has propelled this company to the largest market capitalization in the Canadian market. And perhaps most importantly, Shopify is now trading near its all-time high again.
Part of this recent surge has to do with outsized growth expectations tied to the company’s AI integrations within its world-class e-commerce platform. Shopify enables businesses of all sizes to create fully integrated online stores, taking advantage of both a secular and cyclical trend toward more online shopping. But as the company ramps up its monetization efforts, using AI and other efficiency-enhancing technologies to improve sales for its customers could eventually yield outsized returns in the form of transaction fees.
That’s what I like about Shopify: it’s a company with a highly scalable business model that can meaningfully benefit from this kind of investment. Unlike other AI companies that may never see the profits rolling in, Shopify already is.
based in Vancouver The Metal Company (NASDAQ:TMC) is still my top pick for Canadian small-cap growth companies for investors with some speculative capital.
In my opinion, TMC could be one of the best risk and upside picks in the market due to its early stage first mover advantage in what I believe could be a very lucrative sector. And unlike other sectors such as solid-state batteries or quantum computing with uncertain commercialization timelines, TMC has received permits and has already begun early-stage exploration into deep-sea mining of rare earths and other battery minerals. I think this will be integral to the growth thesis around key industries.
As a convenient way to play some very viable (and lucrative) long-term catalysts, trading TMC at a sub-$5 billion valuation doesn’t make sense to me, given the trillions of dollars of potential opportunities in the future.
Constellation software
One of the true Canadian growth stocks of the old guard that has continued to beat many global growth stocks in the software world. Constellation software (TSX:CSU) is a top pick of mine for investors looking for growth in this space.
CSU shares are down significantly from their peak just a few months ago. Some of this decline appears to be related to a broader market shift away from companies considered overvalued. That’s a label that Constellation Software has certainly been wearing for a long time.
The thing is, I’ve long argued that Constellation’s premium multiple is justified. Nothing has changed in that regard. Constellation acquires small and mid-sized software companies, incorporates them into the company’s portfolio, and improves key metrics such as return on equity and return on invested capital over time. Until these types of trends change, the ample opportunity for continued consolidation in this sector provides a rock-solid catalyst for investors to jump on.
That’s why I believe this dip in CSU stock is one to buy.
#Canadian #growth #stocks #buy #theyre #sale