Forget Robinhood: These Top TSX Stocks Could Make You a Millionaire

Compared to Robinhood, these two high-growth TSX stocks offer a much better risk/reward proposition for long-term investors.

| More on:
financial freedom sign

Image source: Getty Images

It’s just been a week, and Robinhood Markets (NASDAQ:HOOD) stock has already doubled. The eye-popping daily volume indeed indicates the immense popularity of the American trading platform provider stock. On Wednesday, approximately 176 million shares exchanged hands, even after trading stopped several times due to immense volatility.

Will Robinhood stock keep trading higher?

The excitement is certainly fathomable given Robinhood’s growing subscriber base, revenue growth, and a recent interest by famed investors. However, will it continue to outperform, say, two years down the line?

Now, that invites a lot of uncertainty. The pandemic-driven lockdowns and stimulus money drove retail investors towards trading since last year, which fueled Robinhood’s growth. The trend might not keep up as we move towards the “new normal” post-pandemic. Also, the commission-free trading app generates a majority of revenue from routing trades to market makers. The overall process lacks transparency and invites scrutiny by regulators.

In addition, HOOD stock currently looks way overvalued with its price-to-sales valuation of 45. Bloomberg Intelligence has given Robinhood a price target of US$30, representing a 57% downside from its current levels.

All in all, Robinhood’s volatile stock and concerns over its future growth make it a risky bet for now.

High-growth TSX stocks

Aggressive investors looking for growth can look elsewhere. There are plenty of other options that offer attractive growth prospects with reasonable risk. Canadian tech titan Shopify (TSX:SHOP)(NYSE:SHOP) is one of my favourite growth stocks. The e-commerce growth is more discernable, and Shopify is well placed to ride the secular trend.

I think its high valuation multiple is justified with its stellar historical financial growth since 2015. As a result, the stock has soared more than 6,100% since then.

Shopify’s large addressable market and growing product base could continue to drive it higher in the long term. Compared to Robinhood, SHOP stock offers a much better risk/reward proposition for long-term investors.

Consumer lending has also been one of the high-growth areas in the markets. We could see it accelerate further in the post-pandemic environment. As a result, Canadian mid-sized consumer lender goeasy (TSX:GSY) has seen stupendous growth, returning nearly 2,000% in the last decade.

Even if that falls way short of Shopify, goeasy has remarkably outrun the TSX Composite Index. If you’d invested $50,000 in GSY stock a decade ago, you would have accumulated more than a million dollars today.

goeasy lends to non-prime borrowers that top Canadian banks do not serve. This opens a big market with a large growth potential for lenders like goeasy. It plans to launch its auto loans range later this year. goeasy will likely see superior earnings growth, which could drive shareholder returns in the long term.

Bottom line

It is not prudent to focus on a stock’s short-term performance while investing. The immense volatility with stocks like Robinhood could catch you on the other side of the trade. Stocks rising abruptly have also seen extreme drops consequently in the past. Investors should be wary of such stocks. It is important to focus on fundamentals while investing for the long term and ignore the short-term noise.

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.

The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned

More on Tech Stocks

consider the options
Tech Stocks

Is it Too Late to Buy Shopify Stock?

Shopify is one of the most popular stocks on the market. Is it too late to buy shares?

Read more »

Tech Stocks

2 Best Canadian Stocks Under $10 to Buy Now

Cheap TSX stocks such as Payfare and StorageVault are trading under $10. Both these stocks have significant upside potential in…

Read more »

edit Businessman using calculator next to laptop
Tech Stocks

Better Buy: BlackBerry Stock vs. CrowdStrike

BlackBerry and CrowdStrike are tech stocks part of the cybersecurity segment. Which is a better buy between CRWD stock and…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Better Buy: Shopify Stock or Amazon?

Shopify Inc. (TSX:SHOP) is well positioned for growth ahead.

Read more »

Piggy bank next to a financial report
Tech Stocks

TFSA Contribution in 2023: Where to Invest $6,500 Right Now

Here's why you need to consider buying NBLY stock and Docebo stock for your TFSA portfolio in 2023.

Read more »

A bull outlined against a field
Tech Stocks

3 Cheap Stocks I’d Buy in Bulk Before a Bull Market Arrives

After a hot start to the year, here are three discounted TSX stocks that I’d seriously consider loading up on…

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Better Buy: Shopify vs. Constellation Software

Are you interested in buying a tech stock? Find out which is the better buy between Shopify and Constellation Software.

Read more »

Woman has an idea
Tech Stocks

3 No-Brainer Stocks to Buy for Less Than the Cost of 1 Tesla Share

Are you confused as to whether to buy Tesla shares? Here are three no-brainer stocks that can give you exposure…

Read more »