Investors looking for top-notch growth stocks at reasonable valuations certainly have quite the task today. Indeed, the stock market is running red hot. And much of this performance has been related to multiple expansion rather than actual growth.
However, these three top TSX growth stocks are all among the companies with fantastic growth trajectories that support these companies’ respective valuations. Let’s dive into why investors should take a look at these three stocks right now.
Top growth stocks: Spin Master
Many investors might not consider Spin Master (TSX: TOY) to be a growth stock. That said, I believe that shares of this toymaker have tremendous long-term upside potential. Indeed, the Toronto-based company does not only engage in wholesaling and producing games for children. Rather, Spin Master has turned itself into an IP and licensing machine.
Spin Master has accelerated its growth rate by putting more focus on its digital games segment. This division has been the primary reason why Spin Master stock has been able to generate sector-beating returns. I believe that the company has made a wise decision by refocusing its business model in recent quarters toward the digital gaming segment.
Putting the company’s impressive track record aside, there are more reasons for investors to be optimistic. Indeed, Spin Master owns some impressive intellectual property, which the company has managed to leverage prudently over time. Indeed, this company’s portfolio of brands is quite impressive.
With projections indicating that this company might record its highest-ever EBITDA in 2021, this stock has ample room to run.
Constellation Software
For individuals seeking growth stocks in Canada’s tech sector, Constellation Software (TSX: CSU) is certainly a top option. This company has been laser-focused on consolidating the global software market that is highly fragmented. In that regard, Constellation has done a fantastic job thus far.
Indeed, Constellation Software is a proven winner in the tech sector. Shares of this Canadian technology giant have surged over 3,000% over the last decade. Even after so many years, the catalysts that drove this historical growth are still in place. Accordingly, I believe that this is one of the growth stocks with the potential to continue along its trajectory in the years and decades to come.
Now, considering the current size of this company, Constellation’s growth rate may slow over time. However, I think this scenario is priced in right now. Accordingly, I’m considering adding a position in Constellation on dips moving forward.
Shopify
In my view, Shopify (TSX: SHOP)(NYSE:SHOP) is an excellent option for long-term growth investors to consider. After all, Shopify’s exposure to the booming e-commerce space is world-class. As a leading merchant platform providing a range of e-commerce-related functions, Shopify’s importance to the global economy has grown alongside some impressive secular growth catalysts.
Will these catalysts slow? I don’t think so. Rather, I think the pandemic highlighted the shift that’s already underway.
As more and more brick-and-mortar retailers shift to an online or omnichannel model, Shopify will be there along the way. This is a primary reason why Shopify has been able to post stunning growth rates in recent years.
Sure, Shopify just missed quarterly earnings for the first time ever as a publicly traded company. However, this is also a company that’s been raising the bar for more than half a decade, pole-vaulting over expectations each and every quarter.
For those thinking truly long term, Shopify is a great addition right now.
