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Beyond Shopify (TSX:SHOP): This Early-Stage Growth Stock Is More Likely to Go Parabolic

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Shopify (TSX:SHOP)(NYSE:SHOP) is a Canadian success story. The stock has had an incredible run, and even our neighbours south of the border have taken notice, as the e-commerce firm aimed at small- and medium-sized businesses (SMBs) continued blowing defying the laws of gravity, blowing away expectations on what seemed like a consistent basis. Indeed, Shopify makes a strong case for why global investors should look beyond Silicon Valley to Canada’s under-the-radar tech scene.

For the last quarter, the expectations bar was ridiculously high for Shopify. The company managed to pole-vault over expectations once again as the firm revealed blowout numbers amid the COVID-19 pandemic. The company is likely to continue riding high on pandemic tailwinds.

Still, for those looking for a major multi-bagger, it’s probably worthwhile to look beyond Shopify to some of Canada’s alternative cloud-harnessing early-stage growth stocks.

While Shopify is likely to continue defying the shorts by surging towards $2,000 per share, shares of the name have less room to run now that its market cap has hit a whopping $165 billion. The company is quickly becoming a household name and is rapidly approaching mega-cap territory ($200+ billion market cap).

While there’s still room to run, Shopify investors will need to curb their return expectations, as the company continues maturing into a behemoth.

Moreover, if you’re one of many value-conscious Canadians who’s reluctant to pay a more than 50 times sales multiple for a stock, it makes a lot of sense to look to smaller up-and-comers that are now dwarfed by e-commerce behemoth that is Shopify.

Beyond Shopify: A Canadian SaaS king in the making

Consider a relatively unknown tech firm like Dye & Durham (TSX:DND), which has the potential to become the next Shopify.

On a relative basis, shares of DND are still pretty low compared to its Software-as-a-Service (SaaS) peer group, with a price-to-sales (P/S) multiple just north of seven. Over the medium term, DND stock could have a tonne of room to run as its multiple looks to expand once Wall Street has an opportunity to recognize and appreciate the compelling growth story, not to mention the potential for top-line growth to accelerate.

Dye & Durham hit the Canadian IPO scene with a bang just over a month ago. The demand for new issues of the efficiency-driving cloud-based company was nothing short of remarkable. The company aims to increase productivity and efficiencies for legal firms and businesses. Like many other cloud-harnessing small-cap tech firms, the company’s value-adding product has explosive growth potential across a large niche market.

Many prospective clients will quickly realize over the years that Dye & Durham’s product is capable of saving considerable amounts of cash. Sooner or later, the platform may become indispensable for the players within the markets that Dye & Durham serves, much like Shopify is now a must for small businesses that need to get an online store up and running in the shortest amount of time possible.

Foolish takeaway

Over the coming years, I think it’s likely that the market Dye & Durham is going after will discover what they’ve been missing out on. And as the word spreads, expect an absurd magnitude of growth as the early-stage growth company looks to make a name for itself on the TSX Index.

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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.

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