When investors see stocks hit all-time high after all-time high, it could be difficult to enter a position. Many will choose to wait for a correction before buying shares of a high-flying company. However, if you choose to abide by that method of investing, it’s important to realize that you could be waiting for a very long time. In fact, buying shares of companies that manage to hit new all-time highs on a regular basis is a fundamental quality of Foolish investors.
Nuvei (TSX:NVEI) and Topicus (TSXV:TOI) are two stocks that have seen incredible growth this year. Is it too late to buy these stocks? In this article, I’ll discuss whether investors should consider adding these two stocks to their portfolio.
The e-commerce industry will help push this stock forward
Currently, there are very few trends that have as widespread an impact as the rise of the e-commerce industry. In developed countries, the online shopping industry represents a greater proportion of all retail sales than it ever has before. In Canada, e-commerce sales represented more than 11% of all retail sales in April 2020. This is nearly a 300% increase from the 4% of retail sales that online shopping accounted for in 2019. As that industry continues to grow, payment processors like Nuvei should generate massive gains.
In its latest earnings report, the company announced that it saw a 114% year-over-year increase in its quarterly revenue. Over the first half of the year, Nuvei reported a 97% year-over-year increase in its total revenue, showing that Q2 wasn’t a fluke. The company’s strong report resulted in a 15% increase in its stock the day following earnings. Led by a visionary founder-CEO, investors seem to be very attracted to the Nuvei growth story. At a market cap of $23.5 billion, this stock still has a lot of room to grow.
Learning from one of the best
Topicus isn’t a name that many retail investors will be familiar with. If that sounds like you, a quick summary of this company’s business is that it acquires vertical market software companies in Europe. Although you may not be familiar with Topicus, there’s a very good chance that you may be familiar with other companies that operate similar businesses. One that should come to mind is Constellation Software, which has seen its stock increase nearly 12,000% over the past 15 years.
Should investors be worried that Topicus operates in the same industry as Constellation Software? I believe they shouldn’t. In fact, it should be a fact that makes you want to consider an investment in this company. Constellation Software was the parent company of Topicus until this past February, when the latter was spun off into its own entity.
Although it now operates as a separate company, Topicus is still very much influenced by Constellation Software. The larger company holds a large ownership stake in Topicus. In addition, six executives from Constellation Software sit on the Topicus board of directors including Mark Leonard.
Topicus’s massive gain this year could signal that its management team has been able to take advantage of the advice that Constellation Software has been able to impart onto the young company. At a market cap of $5 billion, don’t think for a second that Topicus’s best days of growth are behind it.
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 has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Software and Topicus.Com Inc. The Motley Fool recommends Nuvei Corporation.