3 High-Growth TSX Stocks to Buy in October 2021

While broader markets have corrected by 4% this week, some high-growth TSX stocks have fallen much more than that. Here are three of them.

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Here are three top TSX stocks to buy after the recent market pullback.

Shopify

The recent broad market selloff led by rising bond yields brought down Canadian tech giant Shopify (TSX:SHOP)(NYSE:SHOP) stock as well. The stock is now down by more than 15% since its record levels in July 2021. This could be an attractive opportunity for long-term investors to grab this top growth play while it’s relatively cheap.

Despite the recent fall, SHOP stock is still sitting on a decent gain of 20% so far this year. The company reported almost 84% top-line growth in the first half of 2021 against the same period last year.

Since 2016, the Canadian e-commerce company has managed to increase its revenues by 73% compound annual growth rate (CAGR). Notably, Shopify is among the very few large companies that have managed such a steep revenue growth for such a long period.

Interestingly, Shopify’s growing merchant base, scale, and innovative product range could continue to deliver stellar financial growth in the long term. While it may not be as steep as in the past, investors can expect it to outperform the industry by a wide margin.

BRP

The Powersports vehicle maker stock BRP (TSX:DOO)(NASDAQ:DOOO) got an important boost on its better-than-expected quarterly earnings early this month. The stock is up almost 50% so far this year and looks to be in great shape.

BRP reported revenues of $1.9 billion for the quarter that ended on July 31, 2021. That marked an encouraging 54% growth year over year. In addition, its normalized net income increased to $249 million in the same quarter against $100 million in Q2 of fiscal 2020.

BRP manufacturers popular Powersports brands like Sea-Doo and Ski-Doo. It operates in more than 130 countries and has a dominant market share.

BRP has seen a strong demand recovery from the last few quarters, which is visible in its topline. That’s why the company management raised earnings guidance for fiscal 2022. Now the company expects normalized income growth of 53% to 81% in 2022 against fiscal 2021.

That’s quite a steep earnings surge, marking a significant recovery from the pandemic dip. More importantly, DOO stock is currently trading 13 times its fiscal 2022 earnings. Such a high-growth stock at a discounted valuation is nothing short of a steal.

Boyd Group

Boyd Group (TSX:BYD) has been an interesting growth story that’s been up 200% in the last five years. As the recent market pullback has brought BYD stock down by about 10%, it offers a decent opportunity for diligent investors.

Boyd Group operates non-franchised auto collision repair centers and operates 819 centers across North America. It has been a consolidator in a highly fragmented auto repair market valued at US$40 billion, of which Boyd is responsible for almost $2 billion in annual revenues, indicating huge growth potential.

In the last 12 months, the company reported a net income of $52.8 million against $41 million in the previous period. However, note that Boyd Group operates with a tiny net margin of around 3%.

Despite the recent drop, BYD stock is expensive from a valuation perspective. It is trading 88 times its earnings. However, it has been trading at a premium for a long time. As more cars hit roads post-pandemic and as it expands locations, it could drive Boyd’s financial growth, ultimately boosting BYD 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.

The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends Boyd Group Services Inc. and 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.

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