Over the past decade, growth stocks have taken hold of the markets. Whereas value investors used to outperform, it has been growth stocks that have led the longest bull run in market history. A growth stock is defined as having a growth rate of 10%. That is to say, they are at the very least growing by double digits.
The TSX Index is home to plenty of intriguing growth stocks. Here are three stocks that have not only grown at an impressive pace but have plenty of room to run.
A top consumer cyclical stock
The lesser known of the three, Boyd Group Income Fund (TSX:BYD.UN) shareholders have been well rewarded. Not including dividends, this collision-repair company has returned an impressive 295% over the past five years. That is a compound annual growth rate of 59%! Over the period, the company has grown earnings by approximately 20% annually.
The company is also a Canadian Dividend Aristocrat with a 12-year dividend-growth streak. This is an impressive achievement given that a growth strategy is often at odds with returning cash to shareholders via dividend.
The North American collision repair industry is highly fragmented. As such, the industry is ripe for consolidation, which fits well with Boyd’s growth-through-acquisition strategy. On average, analysts expect the company to grow in line with historical averages, which is in the high teens.
A top energy stock
Parkland Fuel (TSX:PKI) is labeled as an energy stock. However, the company can also be considered as a consumer defensive stock given the nature of its business. The company is one of the largest independent suppliers and markets of fuel and a leading convenience store operator. Over the past handful of years, the company’s stock has average 20% annual growth.
The company has an impeccable record of making accretive acquisitions both at home and abroad. Much like Boyd, there are plenty opportunities for industry consolidation. The difference, however, is that Parkland typically leans towards the big acquisition. Since 2015, it has made several transformational deals that have significantly added to its global footprint.
As a result, sales have more than doubled over the past year, and the company has averaged 10% earnings growth over the past five years. For a company such as Parkland, it is normal to see revenue outstrip earnings growth, as there are many one-time acquisition costs that impact the bottom line.
A top technology stock
The TSX is home to one of the fastest-growing technology stocks in the world — Shopify (TSX:SHOP). In February, the company broke through resistance, and its stock has been hitting all-time highs on an almost daily basis. Since its initial public offering in 2015, Shopify’s stock has grown a whopping 884%! This makes it the best-performing stock on the Index over that period.
Shopify has not yet hit its stride with respect to profitability, but revenue has been growing at triple-digit clip on average. Although the company can’t be expected to maintain this level of hyper-growth, it still has plenty of organic growth ahead. The industry is still in its infancy, and even though Shopify is the industry leader, it only has a fraction of the estimated $70 billion market.
As the company matures, analysts are expecting earnings growth to accelerate. They expect the company to grow earnings by 60% annually over the next five years. It is a figure that is achievable given that Shopify has beat estimates in every quarter since it IPO’d.
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