The COVID-19 pandemic is a socio-economic disaster that’s wreaked havoc on the global economy. Many of the harder-hit businesses out there are seeing their liquidity reserves dry up, and many may not survive to see better days.
At the same time, certain growth stocks have been immune to the COVID-19 crisis. Such tech-leveraging firms have been providing invaluable services that are helping affected clients survive the COVID-19-induced disruption and have actually experienced a surge in demand for their products amid the pandemic.
It’s these firms that will continue picking up traction amid the pandemic and will likely rise out of it much stronger.
Without further ado, consider the following white-hot growth kings if you’re looking for growth amid this pandemic:
Shopify (TSX:SHOP)(NYSE:SHOP) is an e-commerce kingpin that needs no introduction. The TSX stock is a proven multi-bagger and, to this day has continued to defy the laws of gravity, surging above and beyond levels that most thought would ever be possible just a few months ago.
While Shopify’s valuation is ridiculously frothy (at north of 50 times sales, Shopify stock is likely to be the most expensive stock you’ll come across), many investors view the multiple as more than justified given the massive tailwinds that continue mounting.
Shopify is firing on all cylinders, and with many small- and medium-sized businesses (SMBs) rushing to get an online platform to salvage sales amid the pandemic, the company has witnessed an unprecedented surge in demand for its value-adding offerings.
There’s no arguing that Shopify is an exceptional growth business. The company has demonstrated its resilience in this socio-economic crisis, but investors should be wary over the price they’ll pay with the stock flirting with the $1,200 mark.
My takeaway? Get a bit of skin in the game today if you’ve yet to do so and be ready to back up the truck on a meaningful pullback.
Lightspeed POS (TSX:LSPD) is another stock that I pounded the table on back in March. Unlike Shopify, Lightspeed shares are still a country mile below their pre-pandemic all-time highs despite demonstrated resilience in the middle of this pandemic.
For those unfamiliar with the name, it’s a commerce-enabling firm that provides solutions for SMBs, both in the physical and digital realm. The latter of which was heavily discounted by investors, as shares imploded on themselves in the heat of the February-March coronavirus crash, where LSPD stock got cut in half twice, as investors rushed out of names exposed to vulnerable SMBs.
As it turned out, SMBs scrambling to adapt with the unprecedented times needed every edge they could get. And Lightspeed was there with its platforms, including e-commerce, delivery, and payments.
Indeed, the Lightspeed story rhymes with that of Shopify. Although Lightspeed isn’t a pure-play on e-commerce, it’s still an encouraging growth story, and at a fraction of the price of the likes of a Shopify.
Lightspeed is a smaller company with a long growth runway and a multiple that’s still modest on a relative basis at 18.1 times sales and 6.8 times book. Over the coming months, I expect LSPD to be back to all-time highs, as the business continues flowing in.
Last but not least, we have the up-and-coming cloud play that most Canadians have never heard of. Docebo (TSX:DCBO) is a developer of AI-leveraging e-learning solutions and has experienced a profound increase in the demand for its platform as firms around the world have opted to work from home to reduce the risk of contracting COVID-19.
The little-known firm in the lucrative Learning Management System (LMS) market has a pretty wide moat for a firm with a market cap south of the $1 billion mark. The company has innovative AI-based technology that makes it easy for customers to train corporate employees from the comfort of their homes.
And given the likelihood that the “work-from-home” trend will stick around long after the pandemic passes, I’d say that Docebo just found itself riding a new secular growth trend that could propel its stock to unprecedented heights, even in the middle of this recession.
Docebo is still relatively unknown, so its stock trades at a very reasonable 13.3 times sales at the time of writing. The stock recently popped 9.6% on Thursday and is likely headed much higher over the coming month.
Cloud? AI? SaaS? You’re getting it all with Docebo and at a modest multiple.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify. The Motley Fool owns shares of Lightspeed POS Inc.