Since 2015, few companies have managed to outperform Shopify (TSX:SHOP)(NYSE:SHOP). In fact, over the past three years, the e-commerce company’s lead over its peers on the TSX has widened by a large margin. With a three-year gain of 1043%, Shopify appeared in the top spot of the 2020 TSX30 list. The three next highest-ranked companies generated returns of 459%, 378%, and 363%, respectively. When summed, those three companies just barely managed to beat Shopify’s three-year performance.
Although I believe Shopify’s best days are still ahead, it is possible that other stocks could outperform the company over the next 10 years. For starters, Shopify is massive. The law of large numbers states that a company cannot sustain its growth rate as it continues to grow. Therefore, although I remain bullish on Shopify, smaller companies could produce greater returns over the next decade. In this article, I’ll discuss three growth stocks that could outperform Shopify.
This stock is also growing alongside the e-commerce industry
One stock that could beat Shopify over the next decade is Nuvei (TSX:NVEI). The company is an up-and-coming contender within the digital payment industry, which can be seen as operating adjacent to the e-commerce industry. As consumers continue to shop online, merchants will require the services of companies like Nuvei to help complete transactions. What separates Nuvei from its competitors is that its platform allows merchants to streamline their entire payments stack, allowing the successful transaction of mobile, online, in-store, and unattended payments.
On its first day of trading, Nuvei already made history when it closed the largest tech IPO in Canadian history. That means that the payments company managed to raise more capital on its opening day than popular stocks like Shopify. Since its IPO in September 2020, Nuvei stock has continued to generate outstanding returns. Over the past year, the stock has gained more than 240%. As the e-commerce and digital payment industries continue to grow, expect Nuvei to be in the middle of it all.
Learning from a TSX legend
Topicus.com (TSXV:TOI) finds itself in a very unique situation. The company has the opportunity to learn directly from a company that has managed to become one of the most successful businesses of all-time within its industry. How? Well, Topicus was once a subsidiary of the legendary Constellation Software.
Although it now operates as its own entity, Constellation still plays a vital role in Topicus’s day-to-day business. Six members of Topicus’s board of directors are executives from the former parent company, including Constellation’s president Mark Leonard. In addition, Constellation holds a large ownership stake in Topicus. This incentivizes Constellation Software to help Topicus achieve success. If Topicus can take advantage of this opportunity, shareholders could see massive gains in the coming years.
A stock that has benefitted from the pandemic
Although telehealth stocks have seen difficult days since the peak of the pandemic, companies like WELL Health Technologies (TSX:WELL) still offer interesting investment opportunities. The telehealth industry is expected to grow at a CAGR of 26.5% from 2021 to 2026. If that happens, companies operating in that space could see massive returns. WELL Health has also managed to expand into the American healthcare industry, giving it a greater chance of becoming successful. This is a riskier option, but it could work out over the next decade if all the pieces fall into place.
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 Jed Lloren owns shares of Shopify. The Motley Fool owns shares of and recommends Constellation Software, Shopify, and Topicus.Com Inc. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.