The point is that investing also has a certain cyclicality. December is generally a good month for stocks, with the so-called “Santa Claus” rally driven by shifts in portfolio allocation, while tax strategies can lead to big gains for investors who get in at the right time. I’m not going to dismiss this view and wanted to focus this piece on investors looking for top growth stocks to buy ahead of what could be a nice rally in the month ahead.
For those in such a boat, here are three ideas to consider as we turn the page to the final month of the fiscal year.
Constellation software
In terms of Canadian tech stocks being under pressure lately, I would say so Constellation software (TSX:CSU) in this bucket.
Shares of the Canadian software giant have fallen off a cliff since June, when they spiked above the $5,000 level. Now that it’s trading around $3,000 per share, you have to wonder if it’ll be more of the same by the end of this year.
I think Constellation Software could benefit from a number of trends through the end of the year. One of these is additional interest rate cuts by the Federal Reserve and the Bank of Canada, improving the valuation outlook for the company’s software business. Another possibility would be that the outlook for the real economy improves, driven by expectations that productivity growth will resume or accelerate again.
In both cases, a structural purchase could simply be enough to take these shares out of the market. For those considering Constellation Software as a top buy in the long term, this entry point certainly seems like one of the juiciest I’ve seen in a long time.
Kinaxis
For investors looking to capture some upside potential via the continued rise in AI stock, Kinaxis (TSX:KXS) is a Canadian company that could have the most upside among its peers.
The company’s flagship RapidResponse software platform, aimed at improving supply chain efficiency for a range of companies from large to small, has seen strong growth on its own in recent quarters. But with several AI integrations in the core offering, investors hoping that growth will accelerate further from here have tipped their hat on this stock to outperform.
Unfortunately, Kinaxis hasn’t really had a meaningful breakout in a while. This stock is trading in the middle of its medium-term range and could go either way.
I’m optimistic about the company’s long-term prospects, but I’m not sure how the market will view this stock in the coming months. That said, for those looking to buy shares of a quality company at a relative discount, this is a top option. I think there could be a big benefit in December if conditions improve.
Shopify
No list of the best Canadian growth stocks to buy now can be complete without discussion Shopify (TSX:SHOP), in my opinion.
This e-commerce platform provider has been on a tear since bottoming out in 2022. Since that low point, Shopify has more than quadrupled, showing just how prominent this player has become in the market as a whole.
I wouldn’t be surprised if Shopify becomes the first Canadian company to cross the $1 trillion threshold. And while this stock currently trades at about a fifth of its market cap, I’m also well aware that in the long run, anything is possible.
Given Shopify’s robust fundamentals and growth prospects, coupled with what could be strong buying pressure from investors looking for a year-end rally, this is a stock I think is also worth buying during the recent dip.
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