Individuals with a longer investment timeline should focus primarily on growth stocks. This includes millennials and Gen Z investors. While the proportion with which you allocate your portfolio towards growth stocks will depend on your financial goals and tolerance, the important part is that you do include those stocks in your portfolio. Doing so will allow you to take advantage of massive potential gains, helping you reach financial independence later in life. In this article, I discuss two top growth stocks for a millennial portfolio.
You should start with this stock
When it comes to the stock market, there are so few companies that investors should feel comfortable purchasing at nearly any given time. For example, on the American side, investors could feel more comfortable buying companies like Amazon, Apple, and Microsoft at any point of the economic cycle, because the S&P 500 is heavily weighted towards those companies as well. Other companies, like Tesla or Airbnb, should be purchased more carefully. In Canada, a stock investors could purchase on any given day is Shopify (TSX:SHOP)(NYSE:SHOP).
The e-commerce company has rapidly increased in valuation since its IPO. Today, it stands as the largest company by market cap in Canada. As a result, the TSX is now weighted much more heavily towards this stock than it was five years ago. Shopify has done an excellent job of accommodating merchants of all sizes onto its platform. Everyone from first-time entrepreneurs to large-cap companies like Netflix are given all the tools needed to operate online stores. Shopify is certainly a large company today, but it could be much larger by 2030.
If everything goes to plan, this stock could make you a millionaire
In 2006, it may have been hard to imagine that Constellation Software stock would have performed as well as it has. After more than 10,000% in gains, the stock has certainly created several millionaires along the way. For those that weren’t fortunate enough to have ridden the stock over the past decade and a half, have no fear. You have a chance to do it all over again. Many investors are considering Topicus.com (TSXV:TOI) to be in a situation similar to the one Constellation Software found itself in back in 2010.
The biggest reason for this comparison is that Topicus was once a subsidiary of Constellation Software. In fact, it was only this past February when Topicus was spun out into its own entity. Like Constellation Software, Topicus is an acquirer vertical market software companies but focuses solely on the fragmented European market. It should be noted that there is less-intense acquisition pressure from venture capital firms in Europe. That means Topicus has an opportunity to capture companies at a bargain.
Much of this company’s board of directors consists of Constellation Software executives, including Mark Leonard. This means that Topicus has an opportunity to avoid some of the same mistakes that Constellation Software made early on. If Topicus even performs half as well as Constellation Software over the next decade, investors could be very happy with the stock.
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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Jed Lloren owns shares of Apple, Microsoft, Shopify, and Tesla. The Motley Fool owns shares of and recommends Airbnb, Inc., Amazon, Apple, Constellation Software, Microsoft, Netflix, Shopify, Tesla, and Topicus.Com Inc. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple.