Growth stocks have the potential to increase your wealth at an exponential rate over time. As these stocks have a high beta, they tend to outpace the broader markets in a bull run. Alternatively, when markets turn bearish, investors should also be ready for a significant pullback in their portfolio value.
Here, we look at three quality growth stocks in Shopify (TSX: SHOP)(NYSE:SHOP), WELL Health Technologies (TSX: WELL), and The Trade Desk (NASDAQ: TTD) that have already returned over 1,000% to investors in the last five years.
Shopify
Canada’s largest company in terms of market cap, Shopify stock has been up 2,900% in the last five years. In 2020, the e-commerce giant increased sales by 86% year over year. Its stellar top-line growth continued this year, evidenced by sales that were up 57% in Q2.
The ongoing pandemic served as a tailwind for companies part of the e-commerce space, allowing Shopify to onboard merchants on its platform at an accelerated clip. It now has 1.7 million merchants on the platform, at the end of Q2.
Shopify sales have risen at an annual rate of 65% in the last three years, allowing the company to report free cash flows of $507 million in the last year. Further, Shopify has estimated its total addressable market at $153 billion, providing the company with enough room to expand its top-line in the future.
WELL Health Technologies
A Canadian company that has focused on highly accretive acquisition to gain traction in the digital health segment, WELL Health Technologies is valued at a market cap of $1.11 billion. Analysts expect WELL Health sales to rise to $461 million in 2022, up from just $414,000 in 2017.
WELL Health has a majority stake in Circle Medical, a Silicon Valley-based company. Circle Medical aims to have a presence in 46 states by the end of the year and its revenue run rate exceeds $20 million right now. Further, its sales grew by 346% in the last month and rose by 275% in the last quarter on the back of a 191% growth in total active patients.
WELL Health stock is up 6,270% in the last five years, valuing the company at a market cap of $1.38 billion.
The Trade Desk
The final stock on my list is The Trade Desk, a company that operates in the digital advertising space. TTD uses bid factor technology to value ad impressions, allowing advertisers to better target their audience on a real-time basis.
In the second quarter of 2021, TTD sales more than doubled to US$280 million. Its adjusted EBITDA margin also improved to 42%, up from its pre-pandemic EBITDA margin of 36%. The company ended Q2 with 875 enterprise clients and confirmed the number of brands spending over US$1 million in connected television on its platform more than doubled year over year.
The Trade Desk also enjoys a high customer retention rate that has remained over 95% since 2014. It remains well poised to grow revenue at a fast pace in the upcoming decade on the back of aggressive international expansion.
TTD stock has risen by 2,500% in the last five years and is currently valued at a market cap of $36 billion.
