That said, the Canadian market is one (similar to other developed European markets) that I don’t think gets the attention it deserves.
With that in mind, here are three of the best Canadian growth stocks that I think investors would be remiss to ignore right now.
Kinaxis
Kinaxis’ (TSX:KXS) status as a leader in providing mission-critical supply chain software to a range of enterprise customers provides investors with exposure to some of the industry’s most stable (and fastest growing) cash flows.
Given the company’s Software-as-a-Service (SaaS) business model, Kinaxis’ reliable and consistent cash flows provide greater stability than many of its peers. As such, this is a stock that has maintained a premium multiple for a long time.
Valued at around 100 times trailing earnings, it’s hard to call Kinaxis cheap unless you consider the company’s forward growth prospects, supported by AI integrations. I believe these product improvements can drive growth above the 17% growth rate that investors have seen in recent years.
Constellation software
A growth-based name that has taken a beating in recent months (thanks to slowing deal flow and lower-than-expected earnings growth) is Constellation software (TSX:CSU).
I think much of this recent decline is probably justified. Indeed, we now live in a “show me” market, where investors not only want profits to continue growing at their previous levels, but also want to get ahead faster.
As an aggregator of small to mid-cap tech stocks, Constellation should have much more upside than many of its competitors, due to the fact that so many of its target acquisitions could be tied to the AI business. The point is that it is difficult to choose which companies can be profitable sooner or later, and the acquisition costs for such deals have increased significantly.
That said, I think Constellation, as a long-term investment, makes a lot more sense at around $3,000 per share than it did when shares of CSU stock were trading above the $5,000 level.
Shopify
One of the best technology companies North America has to offer, Shopify (TSX:SHOP) remains a company I’m pounding on the table here.
Shares of Shopify stock have been falling lately, recently hitting a new all-time high in October. That said, shares of the e-commerce platform provider have also fallen lately as investors try to discern what the right valuation multiples should be for these fast-growing names.
And so is the fast-growing Shopify. Last quarter, the company achieved sales growth of almost 32%, with GMV also increasing by 32%, while volume processed increased by 67%. Those are incredible growth rates, and given the increase in e-commerce holiday spending (which came at the expense of brick-and-mortar retailers), I expect the company’s Q4 release to show similar numbers.
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