3 Cheap Growth Stocks I’ll Buy Again and Again

Growth stocks like these don’t always come down like they have these last few months, which is why I plan on buying them up before they boom!

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The Santa Claus Rally may indeed be underway with the TSX today making gains after the sell off early this week. It’s a time when investors become optimistic about the next year for growth stocks. Furthermore, investors behind major institutions have gone on holiday, leaving the market in the hands of retail investors.

This creates a pretty volatile situation. Sure, there could be gains over the Santa Claus Rally. However, those gains could be lost fairly quickly. So that’s why I continue to come back to my old faithfuls; companies that I can buy cheap based on fundamentals over and over again.

With that in mind, here are the three growth stocks I always come back to.

Canadian Pacific

Canadian Pacific Railway (TSX:CP)(NYSE:CP) is a favourite of mine. The company went through an overhaul of its business back in 2012 to become a revenue machine. It’s done so well, that this year it (finally) became the winner in the bid for Kansas City Southern. That winning bid makes it the largest railway in all of North America, stretching from Mexico to Vancouver. And it’s why it should be one of the growth stocks you clamber for.

Through those paths are stable revenue streams including oil and gas, agriculture, lumber, you name it. The only halt to the company’s profits has been natural disasters like wild fires, mud slides, and horrible snow storms.

And CP stock has made strong gains in the past few decades, leading to strong dividend increases in the double digits. CP stock is up 135% the last five years, and 11% since September when it won the bid for KCS. So, while debt will increase short term, long-term investors like myself see it among growth stocks for what it is: a gold mine.

Shopify

I can’t always afford Shopify (TSX:SHOP)(NYSE:SHOP), but when I can; I buy it. And right now has proven to be an excellent time. Shopify is down 20% from all-time highs at the time of writing. However, it’s already started to climb back up in the wake of movement among tech stocks. That makes this a prime time among growth stocks to buy for a quick new year boost.

After all, Shopify is coming off the back of stellar earnings in the last quarter. It also reached record-setting Black Friday and Cyber Monday sales. And that wasn’t even the holiday shopping season! So, investors on the TSX today should look out for even more record-beating growth in the next earnings report.

Shopify stock has come up 2,560% in the last five years, and 16% year to date. While returns are likely to become more tepid in the years to come, there’s bound to be one last push for growth stocks like this towards that $2,000 mark. So you’ll absolutely want to be a part of it.

TD Bank

Finally, I love Toronto-Dominion Bank (TSX:TD)(NYSE:TD) because of everything it offers. It’s one of the growth stocks that’s in the safety and security of the banking industry. TD stock offers investors the highest number of credit card partnerships, wealth and commercial management income, United States expansion, and high loan repayments. This comes from catering to the do-it-yourself clients who want to do banking themselves.

This in turn led TD stock to invest in its online presence during the pandemic; and that’s seen even more growth for the company. Yet, analysts believe there is even more money to be used towards acquisitions, partnerships, and more in the near future. So TD stock certainly isn’t one of the growth stocks that will be done any time soon.

Shares of TD stock are up 40% in the last five years, and 27% year to date. Meanwhile, it offers a dividend yield of 3.78%, just increased by management. Yet, it’s incredibly cheap, trading at 12.29 times earnings as of writing.

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 Amy Legate-Wolfe owns Canadian Pacific Railway Limited, Shopify, and TORONTO-DOMINION BANK. The Motley Fool owns and recommends Shopify.

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