Growth stocks have turned out to be a tricky asset class to invest in of late. Indeed, investors that could do no wrong investing in growth stocks in the past have seen various favourites stumble of late. Rising inflation concerns and volatility in bond yields have provided the biggest headwinds to growth investors of late.
Indeed, it appears a growth-to-value rotation is underway. That said, it’s not necessarily time to give up hope on growth stocks right now.
Here are two high-quality growth stocks with the potential to outperform over the long run. These are stocks every investor ought to consider in this environment today.
Spin Master (TSX:TOY) has been on my radar for some time now. And it seems more investors are now becoming aware of the potential of this fine TSX growth stock.
Indeed, Spin Master’s impressive portfolio of IP has led to an impressive growth track record for investors in recent years. This toymaker has been among the beneficiaries of the pandemic. A s we’ve all been forced to look for in-home entertainment options, Spin Master has been there to support us in these endeavours.
Besides physical toys, Spin Master has made a big move into digital gaming. Indeed, this is the segment that has taken off the most for the company this past year. Spin Master’s digital gaming segment saw growth of 400% year over year as a result of the pandemic.
However, there are indications this growth is structural rather than transitory (to put it in the Fed’s terminology).
The company’s impressive track record of innovation in designing and mass-marketing its brands provides Spin Master with a uniquely wide moat among its peers. Indeed, the track record of Spin Master bodes well for investors betting on the company’s management team to continue to innovate its way toward future growth.
Since its Initial Public Offering (IPO), Kinaxis (TSX:KXS) has been a 10-bagger on TSX. Indeed, this is a stock that has charmed investors with its performance in terms of share price appreciation. It’s been one of the best performers in the Canadian tech space for a reason.
The company’s core business as a supply chain management technology provider is bullish for those expending surging economic activity coming out of this pandemic. Accordingly, as far as TSX pandemic recovery plays in the tech sector go, Kinaxis ought to be a top pick.
This company’s recurring revenue model is equally attractive. Kinaxis has built a rather sticky customer base and a robust moat around its existing business. Accordingly, investors betting on the brand loyalty Kinaxis has received are likely to do well holding this stock over the long term.
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 stocks mentioned in this article. The Motley Fool owns shares of and recommends Spin Master Corp. The Motley Fool recommends KINAXIS INC.