In my opinion, the best time to buy stocks one likes is when everyone is selling. Given the current state of the market today, there are opportunities for such investors.
Growth stocks have sold off considerably of late. However, I think in many cases, the good stocks are getting thrown out with the bad.
In this article, I’m going to discuss why Constellation Software (TSX:CSU) and Boyd Group (TSX:BYD) are great picks in this regard. These stocks are ones I’d buy on any dip. Accordingly, those bullish on the growth these stocks can provide long term may want to consider these stocks right now.
Constellation’s growth-by-acquisition strategy has become a case study for investors in how such operations should work. Constellation’s track record of outperformance speaks to the validity of this model. Indeed, the company’s stock price has more than tripled over the past five years. Constellation has a keen eye for small-cap companies in its sector, which it has prudently been acquiring. This consolidation strategy has increased its returns and cash flow dramatically over time.
Constellation happens to have thousands of potential targets to choose from. And the company only picks the best of the best to join its conglomerate. By acquiring high-growth companies at a reasonable price, Constellation has been able to produce out-of-this-world returns on invested capital for investors over the years.
Constellation is perhaps the best long-term growth holding on the TSX right now. For those who believe the company’s future is as bright as its past, this is an easy pick here.
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A company with a similar business model to Constellation’s is Boyd Group.
However, unlike the software space, Boyd focuses on consolidating the fragmented auto repair industry. This business model has turned out to be equally lucrative for Boyd investors over the years. Taking a look at the company’s long-term chart says as much.
Of course, the pandemic hasn’t helped the company’s growth prospects of late. With people not driving around that much, sales have dropped. This near-term pressure has provided what I view as a nice buying opportunity with this stock of late.
That said, Boyd has still provided some incredible returns to investors over the past decade. This stock has been a 30-bagger for long-term growth investors who have held over the years. That’s not bad — for any stock.
If the company can continue to acquire companies at discounts over time and grow earnings proportionally, more growth could be on the horizon. This is another great long-term growth pick for contrarian investors in this environment.
Like these top growth picks? Here are 10 more to consider right now:
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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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Software. The Motley Fool recommends Boyd Group Services Inc.