The Canadian stock market is on track to end 2021 as one of its strongest years in a long time. The S&P/TSX Composite Index is up more than 20% year to date. Even more impressively, that same index is up an incredible 80% since the COVID-19 market crash in early 2020.
Another market crash will happen at some point. The market’s been riding an unbelievable bull run for more than a year and a half but I’m not letting a potential upcoming pullback affect my investing strategy. My focus remains on buying high-quality Canadian stocks and holding for the long term.
Another 20% gain in 2022 is a lot to ask of the stock market. That said, there’s certainly the possibility of individual companies delivering that type of growth next year.
I’ve reviewed two top picks that I’m betting will be market-beaters in 2022. I have both Canadian stocks at the top of my watch list right now.
Canadian stock #1: Nuvei
As a mega-bull in the digital payments space, I’ve had Nuvei (TSX:NVEI)(NASDAQ:NVEI) on my watch list since it went public in September 2020. Since then, shares of the tech stock are up a market-crushing 200%.
After Lightspeed Commerce’s recent sell-off, Nuvei’s $20 billion market cap now ranks it as the larger of the two companies. Similar to Lightspeed, Nuvei offers its global customers a long list of different payment processing solutions.
What has me bullish on Nuvei specifically is the company’s commitment to growth. Management continues to focus on expanding both the company’s product offering and global presence, which only helps increase the size of Nuvei’s market opportunity.
Shares are far from cheap at a price-to-sales (P/S) ratio of close to 30. That’s the cost of owning a top Canadian growth stock today.
If you can handle some volatility, I’m betting that this Canadian stock will have many years of market-beating growth ahead of it.
Canadian stock #2: Docebo
Sticking with expensive tech stocks, I’m aiming to be a Docebo (TSX:DCBO)(NASDAQ:DCBO) shareholder before the end of 2021. I’ve had this Canadian stock on my watch list for a few months, and now that it’s trading at a discount, I’m ready to pull the trigger.
Similar to Nuvei, Docebo is also relatively new to the TSX. The company went public in October 2019 and has been a five-bagger since.
The Canadian stock is down more than 20% below all-time highs that were set two months ago. Still, shares are valued at a lofty P/S ratio of almost 30. Considering the growth that the tech stock has delivered as a public company, a premium price should be expected.
Demand for Docebo’s software exploded during the pandemic. The company’s AI-powered learning platforms became that much more important to its customers when many employees unexpectedly needed to begin working remotely.
As more and more employees return to shared office spaces, it would only be natural to see a slight decline in revenue growth for Docebo. But as a long-term investor, I’m more than happy to take advantage of any short-term sell-offs.
I’m betting that the pandemic has created a long-term shift in the work environment. Many employees have had a taste of the luxuries of working remotely.
If you think remote work is here to stay too, I’d seriously consider starting a position in this Canadian stock before it’s back to all-time highs.
