Growth stocks have lost their appeal in 2022. Fear of an economic slowdown and valuation concerns led to a massive decline in the prices of several top TSX growth stocks. While the economic environment has not improved, and the outlook remains uncertain, I believe now is the time to buy top growth stocks in small quantities to handily beat the TSX in the long term.
So, if you can spare $400, here are the four best growth stocks with the potential to outperform the broader markets.
Shopify
Undeniably Shopify’s (TSX: SHOP)(NYSE:SHOP) performance has not impressed in the first of 2022. Meanwhile, macro headwinds and a slowdown in e-commerce demand could continue to hurt its revenue and gross merchandise volumes in the second half of the year. Further, its planned investments in e-commerce infrastructure will likely hurt near-term margins.
All these points mean that Shopify stock could stay range bound in the short term. However, its long-term fundamentals remain intact, and the company will likely benefit from the re-acceleration in e-commerce growth. Also, its investments in fulfillment and POS (point of sale), growing adoption of Capital and Payments, and expansion of merchant solutions provide a multi-year growth platform.
Aritzia
Aritzia (TSX: ATZ) is solid long term bet. Its ability to consistently deliver strong organic sales and profitable growth is why Aritzia stock could generate solid returns in the long term. While its base business continued to grow rapidly, Aritzia is expanding its footprints in the U.S., which will likely accelerate its growth further.
Moreover, the expansion of its product offerings and entry into new segments are positives. Aritzia’s solid expense management, new boutique openings, reduction of debt, and ability to generate strong cash flows position it well to beat the TSX by a wide margin in the long term.
Nuvei
Digital payment technology company Nuvei (TSX: NVEI)(NASDAQ: NVEI) could be a solid addition to your portfolio at current levels. The momentum in its business continues on the back of new customer wins, a growing base of new alternative payment methods, and the expansion of digital assets and cryptocurrency solutions. Further, its continued investments in sales and marketing bode well for growth.
Nuvei expects its volume and revenue to increase at a CAGR of over 30% in the medium term, which is positive. Further, its expansion into high-growth verticals (like social gaming), entry into emerging markets, strategic acquisitions, and new product launches augur well for growth.
Telus
Communication giant Telus (TSX: T)(NYSE: TU) presents a solid opportunity for investors to bet on the 5G revolution. Investors can benefit from Telus’s solid dividend payments along with capital appreciation. Notably, Telus is known for its ability to consistently deliver profitable growth and enhance shareholders’ returns through higher dividend payments.
Through its dividend-growth program, Telus has returned more than $16 billion to its shareholders in the form of dividend. Furthermore, its continued investments in PureFibre network and focus on enhancing the coverage and speed of its 5G capabilities augur well for growth. This, in turn, strengthens its competitive positioning and drives customer growth. Also, its ability to win customers and operating efficiency are positives. While Telus is poised to deliver solid capital gains, investors can earn a reliable yield of 4.6% by investing in it at the current levels.
