The ongoing fluctuations in the stock market shouldn’t worry a long-term investor. Rather, investors should focus on high-growth and fundamentally strong stocks that have reversed some of their gains and look attractive at current levels.
With in mind, I’m bullish on Shopify (TSX:SHOP)(NYSE:SHOP), Dye & Durham (TSX:DND), and WELL Health Technologies (TSX:WELL) stock. These tech companies have delivered sky-high returns on stellar financial and operating performance in the past.
I believe these companies have strong growth catalysts that could help them continue to grow at a healthy pace in the coming years. Furthermore, all of these stocks have witnessed a healthy pullback and cooled off a bit, presenting an excellent buying opportunity.
Shopify stock has jumped about 650% in the past three years and over 4,029% in five years. The spectacular growth in Shopify stock is driven by the sustained demand for its e-commerce platform, solid growth in its top line and its growing market share.
Looking ahead, I expect Shopify to continue to deliver stellar returns, reflecting strong demand, improving operating leverage, and favourable industry trends. I believe the spending on the digital platforms could continue to increase, providing a solid base for future growth in Shopify stock.
Further, its robust fulfillment network, growing merchant base, the addition of high-growth sales channels, and the expansion of its global footprint bode well for growth. Also, the growing adoption of its payments platform is likely to accelerate its growth rate. Shopify stock has declined by about 19% in three months and looks could be an attractive addition to your portfolio.
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Dye & Durham
Dye & Durham stock skyrocketed, delivering over 181% since listing on the TSX in July 2020. Its high-growth and high-margin business fuel the growth in its stock. The company has consistently delivered stellar revenues, reflecting continued momentum in its base business and benefits from acquisitions.
I believe its diversified and large customer base, global expansion, up-selling opportunities, long-term contracts, and high retention rate are likely to drive its revenues and adjusted EBITDA. Moreover, its strong acquisition pipeline could continue to accelerate its growth rate and strengthen its competitive positioning.
Dye & Durham looks attractive on the valuation front and trades at a 12-month EV/sales multiple of 8.4, which is well below the historical levels. Notably, it has reversed some of its gains and has corrected by over 10% in the last three months, providing a good buying opportunity.
WELL Health stock delivered solid returns in the past and has jumped over 134% in one year and about 1,116% in three years. Rising demand for its digital products and its robust capital allocation strategy accelerated its growth rate and drove its stock higher.
I expect WELL Health to continue to deliver strong returns in the coming years, thanks to its growing scale, strategic acquisitions, and expansion of the electronic medical records business.
The secular industry tailwinds, momentum in the business, expansion in high-growth markets, cost optimization, and growing operating cash flows indicate that WELL Health could continue to deliver solid financial numbers in the coming years. Its stock has witnessed a healthy correction and looks attractive at current levels.
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 Sneha Nahata 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 and recommends the following options: long January 2023 $1140 calls on Shopify and short January 2023 $1160 calls on Shopify.