This year thus far has not been friendly to growth investors. Indeed, a range of growth stocks have been hit incredibly hard, in the face of rising interest rates and inflationary concerns. Certainly, these concerns are real and ought to be priced in.
However, this selloff raises the question: are there any companies out there that got hammered unreasonably? If so, which are worth a look at these lower levels?
Top growth stocks: Constellation Software
One of the top consolidators in the software space, Constellation has grown to become one of the largest tech companies in Canada. This isn’t by accident.
Since its IPO, this company’s valuation has grown 10-fold. Constellation has shown consistently with its business model of growing via acquisitions. Yet that did not stop CSU stock from plummeting 14% from 52-week highs, as of the end of last month.
That said, I think the analyst consensus of around $2,500 per share is reasonable right now. This company has a number of core businesses that ought to benefit from strong long-term secular trends. Accordingly, these near-term dips provide buying opportunities for those seeking quality growth right now.
Perhaps the most notable company in Canada, Shopify’s stock price is now down more than 50% from its peak. And that’s after a rise of more than 7% today.
That said, I think there’s still a lot to like about how Shopify is positioned right now. The company’s growth is slowing, though its growth rate remains well above the average in its sector and the TSX. Shopify is now profitable and is growing its earnings at an incredible rate.
Accordingly, over the long term, there’s a lot to like about Shopify stock.
Shopify’s status as a premier platform for small- and medium-sized businesses to set up online shops is noteworthy. This company has done well to “democratize” e-commerce. Indeed, this is a trend I think has legs, and Shopify is a stock worth considering on this dip.
A much less-exciting company than the other two on this list, Boyd is a great pick for long-term growth investors.
A growth-by-acquisition play, Boyd has done an incredible job of consolidating the fragmented car repair industry.
I would term Boyd Group’s business as an almost evergreen one. And there are reasons for that.
Consider that there are around 1.4 billion cars on the planet, and over one-fifth of them are in Canada and the United States alone. Boyd Group operates one of North America’s biggest non-franchised collision repair centres chains and features five brands under its banner. A comprehensive auto repair business like this in these two nations certainly appears to be an almost evergreen one to me.
An evergreen business, stable revenue streams (insurance organizations), a geographically diverse presence, and solid growth potential are three great reasons to invest in this TSX stock.