2 Stocks I’m Buying Next

Which two companies am I looking to add to my portfolio soon?

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

As a growth investor, I aim to hold companies with long growth runways in my portfolio. Canadian names I own include Lightspeed and Shopify. Looking ahead, which two companies am I hoping to add soon?

An up-and-coming e-learning platform

Docebo (TSX:DCBO) provides a cloud-based e-learning platform for enterprises. It makes use of artificial intelligence to help managers identify weaknesses within the workforce. Docebo also offers management and analysis software, which helps streamline the training process.

Over the past four years, Docebo has been able to increase its revenue each year. Since 2016, its annual revenue has increased by more than 400%. The company has also become profitable over the past 12 months, which is a great milestone. Docebo has a very strong balance sheet, with over $46 million in cash on hand and only $20,000 in short-term debt. If the COVID-19 pandemic continues to restrict companies from spending, Docebo should be able to outlast the tough period.

Docebo has gone up 39% since I first covered it. Is there still room for growth? Though there may be a stagnant phase while the company’s earnings catch up to its valuation, Docebo is still a very young company. It currently has a market capitalization of $1 billion, so the growth runway is still quite long if Docebo stays on track. With big customers signed up to its platforms (e.g., Appian, Cineplex, Thomson Reuters), the future is looking good for the company.

Growth by acquisition

One of the top Canadian tech companies over the past decade has been Constellation Software (TSX:CSU). The company acquires smaller tech companies that appear to have a very positive future with hopes of helping them grow into exceptional companies. As the acquired company grows in size, so does Constellation. It is a proven business model that the company has executed for over two decades, and it has shown no signs of faltering soon.

Led by an excellent management team, Constellation’s subsidiaries have been reaping the rewards of the coaching and resources made available by the parent company. This has been reflected in Constellation’s revenue over the years. Over the past four years, the company’s revenue has increased each year. Like Docebo, Constellation has a very strong balance sheet with more than 10 times the amount of cash on hand than short-term debt.

Constellation stock has increased over 8,000% since the company’s IPO, so it is reasonable for investors to ask how much growth is possible in this company. At a $32 billion market cap, Constellation is one of the largest companies in Canada.

As stated in the company’s 2017 President’s Letter, Constellation is still trying to stay ahead of its competitors. This indicates to me that the company still aspires to grow aggressively in the future and maintain its market share within the industry. I am confident that Constellation will continue to benefit shareholders for many years.

Foolish takeaway

Docebo and Constellation Software are two very exciting companies. Although they differ greatly in terms of life stages, both companies appear to have very long growth runways ahead. I do not currently own shares in either company at the moment, but I am hoping to change that soon. Perhaps consider looking into these two companies if you are looking for strong growth in your portfolio.

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 Jed Lloren owns shares of Appian, Lightspeed POS Inc, and Shopify. Tom Gardner owns shares of Appian and Shopify. The Motley Fool owns shares of and recommends Appian, Constellation Software, Shopify, and Shopify. The Motley Fool owns shares of Lightspeed POS Inc.

More on Tech Stocks

TFSA and coins
Tech Stocks

TFSA: Invest in These 2 Stocks for a Legit Chance at $1 Million

Are you interested in building a $1 million portfolio? Invest $20,000 in these two stocks!

Read more »

top TSX stocks to buy
Tech Stocks

2 Top Stocks That Could Turn $10,000 Into $50,000 by 2030

TSX investors can buy shares of quality growth stocks, such as Snowflake, allowing them to generate exponential gains in 2023…

Read more »

Tech Stocks

Don’t Wait for a Market Bottom: These 2 Stocks Are on Sale

Two of the best Canadian growth stocks could keep soaring in 2023 and beyond.

Read more »

clock time
Tech Stocks

3 Top ‘Future’ Stocks to Hold for the Rest of This Decade

Canadian growth stocks like Constellation Software are starting to look appealing.

Read more »

Credit card, online shopping, retail
Tech Stocks

Nuvei stock: Can This Gainer Keep on Running?

Despite a 40% increase in its stock price, I expect the uptrend in Nuvei to continue, given its higher growth…

Read more »

value for money
Tech Stocks

3 Growth Stocks You Can Buy Now With Less Than $100

Thanks to the recent bear market, you can now buy growth stocks like Shopify at bargain prices.

Read more »

Upwards momentum
Tech Stocks

The 1 Canadian Stock I Think Could Double in 3 Years

Here’s why this top Canadian stock has the potential to double in three years or sooner.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Open Text Stock Rose 11% Last Month

Not all tech stocks are performing poorly. In fact, Open Text stock (TSX:OTEX) continues to rise higher, though it's still…

Read more »