The 3 Smartest Growth Stocks to Buy in Canada Right Now

When you are trying to add more growth to your portfolio, it’s better to stick with known, safe businesses instead of taking a chance with high-risk, high-reward assets.

| More on:
consider the options

Image source: Getty Images

Growth stocks, especially those that offer to double your capital in just a few years, are usually too expensive or quite risky for most investors, and investors don’t love either of these are traits. But that’s the price that needs to be paid for the potential of fast growth.

But if you wish to play it smart and capture the upside that growth stocks offer without bringing on more risk to your portfolio, you have to stick to a relatively small pool of safe growth stocks with amazing potential.

A professional services company

Investing in a company whose sole job is investing is a good idea when the company knows what it’s doing. Colliers International Group (TSX:CIGI), professional services and investment management company appear to know what they are doing and their success (or at least the investor perception of it) is reflected in the company stock.

Colliers has a 10-year compound annual growth rate (CAGR) of 26.7%, high enough to double your investment capital in a decade. The company primarily focuses on the real estate market and works with various stakeholders in the industry. It has about $45 billion worth of assets under management and operates in 66 countries, making it a diversified and safe growth bet. The price tag is quite heavy, though.

A transport company

TFI International (TSX:TFII)(NYSE:TFII) has seen an amazing 2021 (so far). The stock has grown almost 98% since the beginning of the year, and that’s after the small 11% correction the stock just experienced. And if you go back further to the market crash, the growth becomes quite monstrously high: 385% in less than two years.

As a transport company with an extensive network of operating companies in North America and one of the largest trucking fleets, the company has capitalized quite a bit on the e-commerce boom and the supply chain constraints the world faced in the last couple of years.

The stock is going through a correction, and it is oversold at the moment (with the RSI at about 36.4). But as soon as it reaches down to a more reasonable valuation, it’s worth buying.

A real estate service company

FirstService (TSX:FSV)(NASDAQ:FSV) is easily one of the most powerful growth stocks currently trading on the TSX, and it has been since the day it started trading on the TSX. The stock has been growing consistently for about six years, and the only major dip the stock experienced was during the 2020 crash. And even then, the stock reclaimed its post-pandemic high in under six months.

FirstService also happens to be a Dividend Aristocrat, but the 0.4% is a far less compelling number associated with the stock compared to the five-year CAGR of 32.2%. It’s high enough to grow your capital by about four times in the next five years (if it can keep the growth pace). Naturally, the stock is quite overpriced, but given the potential it offers, the price might be just right.

Foolish takeaway

The TSX has a decent selection of amazing growth stocks at any given time, but not all growth stocks are worth holding on to for decades, and many shouldn’t be held for such a long time. Some companies reach their growth peak in a few years, and once they do and the downward movement of their stocks becomes permanent, holding on to them in the hopes of a powerful recovery might not be a valid strategy.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends COLLIERS INTERNATIONAL GROUP INC and FirstService Corporation, SV.

More on Dividend Stocks

A bull and bear face off.
Dividend Stocks

The 3 TSX Stocks to Buy Before a Long-Term Bull Market Begins to Build

The TSX may not go bullish for a while, even when the economy recovers from a recession, but investors should…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: Make $200 in Monthly Passive Income With This 1 TSX Dividend Stock

Here’s an attractive dividend stock TFSA investors can buy now to earn $200 in monthly passive income.

Read more »

A plant grows from coins.
Dividend Stocks

TFSA Investors: How to Create $40,000 in Returns and Passive Income in 30 Years

If you think you'll need just $40,000 in passive income per year in retirement, your TFSA can get you there…

Read more »

stock analysis
Dividend Stocks

Buy These TSX Dividend Shares Next Week

Are you looking for dividend stocks to add to your portfolio? Buy these picks next week!

Read more »

edit Safety First illustration
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

These three dividend stocks are all high-quality companies with defensive operations, making them some of the safest investments in Canada.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the…

Read more »

money cash dividends
Dividend Stocks

3 Solid Dividend Stocks That Cost Less Than $30

Given their solid financials and healthy cash flows, the following under-$30 dividend stocks are a good buy in this volatile…

Read more »

grow money, wealth build
Dividend Stocks

2 High-Yield Dividend Stocks With Rock-Solid Payout Ratios

These two dividend stocks offer unbelievably high yields of more than 7% and earn more than enough free cash flow…

Read more »