Investors dream of finding those stocks that can generate massive returns. Although it seems impossible to do, the fact is that these things do happen. In this article, I’ll discuss four TSX stocks that could generate five-fold returns. That means turning a $100,000 into $500,000. By applying this type of success to many stocks over time, investors could accumulate generational wealth or, at the very least, a comfortable retirement.
Stock #1: Shopify
Shopify (TSX: SHOP)(NYSE:SHOP) is the first stock that I think could generate these kinds of returns. This company is a leader within the global e-commerce industry. It provides a platform and many of the tools necessary for merchants to operate online stores. Its platform caters to everyone from first-time entrepreneurs to large-cap enterprises.
Shopify has come under fire recently for its slowing growth rate. However, as of the second-quarter (Q2) 2022, its monthly recurring revenue is still growing at a compound annual growth rate of 35%. This is a very important metric to consider because the company is largely dependent on a subscription-based business model. As long as that figure continues to increase, investors should give this stock a chance.
Stock #2: Constellation Software
Constellation Software (TSX: CSU) is the next stock that investors should consider buying today. This company acquires vertical market software (VMS) businesses and helps transform them into exceptional business units. Constellation Software does that by providing the coaching and resources necessary. This growth strategy has proven to be very successful in its nearly three decades of operation.
When it comes to outperforming the market, this stock is certainly capable of doing that. Constellation Software held its initial price offering in 2006. Since then, the stock has gained nearly 10,600%. To put that into perspective, a $10,000 investment made 16 years ago would be worth about $1 million today.
Stock #3: Topicus.com
Topicus (TSXV: TOI) is the next stock that I think is worth consideration. Much like Constellation Software, this company acquires VMS businesses. It differentiates itself by focusing on the highly fragmented European tech industry. What’s great about that strategy is that European tech businesses tend to receive far less acquisition pressure from venture capitalists. This could allow Topicus to acquire businesses at a cheaper valuation.
It should be noted that although it operates as its own entity, Topicus is still linked to Constellation Software. You may be aware that Topicus was once a subsidiary of the larger Canadian tech stock. Today, six members of Topicus’s board of directors are executives from Constellation Software. That could give Topicus access to a wealth of knowledge, helping it find success in the future. In 2022, Topicus has already acquire more than 20 VMS businesses.
Stock #4: Docebo
Finally, investors should consider Docebo (TSX: DCBO)(NASDAQ: DCBO). This company offers enterprises with a best-in-class learning management system platform. Its AI-powered and cloud-based offering provides training managers with the ability to assign, monitor, and modify employee training more easily. In its short history, Docebo has managed to attract many big-name customers. This includes a multi-year partnership with Amazon to power its AWS Certification and Training programs.
