Forget Disney (NYSE:DIS): Buy This Hot Growth Stock Instead

Walt Disney (NYSE:DIS) is a solid long-term investment, but there are better growth stocks out there for investors.

| More on:
Business success with growing, rising charts and businessman in background

Image source: Getty Images

Walt Disney (NYSE:DIS) is a decent, long-term investment that investors can hang on to for years. The company’s built up a strong brand over the years and there’s nothing wrong with holding it in your portfolio. Sales were up 21% in the company’s most recent quarterly results. In the previous period, they grew by 36%.

The Disney+ streaming service will give the company another avenue to grow its sales. However, with HBO Max now out and competition among streaming services likely to ramp up, it isn’t going to be a smooth path for the company.

And with shares of Disney trading at a forward price-to-earnings multiple of around 40, investors are paying a steep price for the stock.

A TSX stock that could be a hotter buy than Disney

For investors seeking growth over stability and wanting to maximize their potential returns, Disney’s stock simply may not be the best option right now. A more up-and-coming growth stock that investors may want to consider instead is Lightspeed POS (TSX:LSPD). The software company is coming off an impressive quarter that saw its sales up a staggering 70%.

That level of growth is hard to find, and given the relatively small size of Lightspeed, there’s still ample room for it to continue growing. While I won’t call it the next Shopify, it certainly has the potential to be the next big tech stock on the TSX.

Its point-of-sale platform is winning over customers, and as more businesses go to the cloud amid the COVID-19 pandemic, Lightspeed could continue to see strong demand for the foreseeable future.

That’s why getting in early and buying the stock while its market cap is a modest $3 billion could set you up for some strong returns later on.

By no means is the stock a value buy; it’s trading at about 16 times sales and six times its book value. But once you compare it to Shopify’s ridiculous valuation, which includes a price-to-sales multiple of 50 and a price-to-book ratio of around 30, it looks dirt cheap.

Lightspeed has a long way to go in being in the same stratosphere of Shopify, but right now it’s following in the same footsteps.

Like the tech giant, it strives to provide a comprehensive online solution, except it’s focused more on businesses, whereas Shopify targets a broader consumer market. But by focusing on corporate clients rather than consumers, Lightspeed’s business could be much more stable and consistent than Shopify’s, perhaps even profitable.

Bottom line

While shares of Lightspeed have shown little change over the past year, that’s an intriguing reason to consider buying the stock today. Given its level of growth and the popularity of its business, it has the potential to generate significant returns over the long run.

There’s always going to be a risk that the company doesn’t live up to expectations, but based on the results it’s been generating thus far, there’s plenty of reason to be bullish on its future.

As the economy starts to open back up and things get back to normal, Lightspeed’s sales and its share price could take off in a hurry.

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 David Jagielski has no position in any of the stocks mentioned. David Gardner owns shares of Walt Disney. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify, Shopify, and Walt Disney. The Motley Fool owns shares of Lightspeed POS Inc and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney.

More on Investing

A bull outlined against a field
Dividend Stocks

3 Cheap Stocks I’d Buy Before the Bull Market Arrives

Undervalued TSX stocks such as Savaria and Well Health can help investors generate market-beating gains when markets recover.

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Investing

2 Top REITs You Can Buy and Hold Forever

These two top REITs are among the best options for long-term, buy-and-hold investors in this current uncertain market.

Read more »

Aircraft Mechanic checking jet engine of the airplane
Investing

Could Bombardier Stock Be a Big Winner in 2023? 

Bombardier stock outperformed the TSX Composite Index last year by executing its turnaround. Could it continue the momentum in 2023?

Read more »

Increasing yield
Dividend Stocks

5 Canadian Dividend Stocks With Yields of 4% or More

If you want dividends that yield over 4%, you don't have to look far. Here are five large-cap Canadian stocks…

Read more »

Man making notes on graphs and charts
Investing

3 Cheap Stocks I’d Buy Before the Market Erupts

Here are three cheap stocks that are well positioned to reward investors in the months ahead.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Investing

Looking for Yield? 2 Top Bond Proxies Could Be Just the Ticket

Here's why SmartCentres REIT (TSX:SRU.UN) and Rogers Communications (TSX:RCI.B) are two top bond proxies worth buying right now.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

2 Energy Stocks That Could Hold Up if Oil Prices Turn

Suncor Energy (TSX:SU) and Cenovus Energy (TSX:CVE) are great energy stocks that could continue higher through 2023.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

3 Blue-Chip Dividend Stocks I’d Buy Over and Over

These three dividend stocks are some of the best stocks to buy right now to create strong income not just…

Read more »