As a new investor, it could be difficult to pick the right stocks for your portfolio. A lot of the traditional advice tells new investors to stay away from growth stocks, because they can be much harder to assess. For those that are unfamiliar, growth stocks are simply companies that appear to be growing at a faster rate than the average company in their industry. This leaves the classification of a growth stock up for interpretation, depending on how an investor would like to quantify that growth.
In my opinion, new investors could certainly consider adding growth stocks to their portfolio. However, I believe they should keep that type of asset as a smaller proportion of their overall stock portfolio. This is because growth stocks tend to be more volatile than dividend stocks, for example. This volatility could cause new investors to become uneasy if the majority of their portfolio is composed of growth stocks. In addition, new investors should look for blue-chip stocks with growth characteristics.
In this article, I’ll discuss two growth stocks that new investors should consider buying today.
Buy this amazing tech company
Constellation Software (TSX:CSU) is the first growth stock that new investors should consider buying today. This company has made a name for itself over the past 16 years as one of the most consistent stocks on the TSX. In fact, since its initial price offering in 2006, Constellation Software stock has gained more than 10,700%! That represents a compound annual growth rate (CAGR) of about 33%.
Led by its founder and chief executive officer Mark Leonard, Constellation Software acquires and manages vertical market software (VMS) businesses. Historically, this company has focused on small- and medium-sized businesses. Since its inception, Constellation Software has proven that it has the ability to identify strong businesses and build them into exceptional business units.
In 2021, the company announced that it would finally start targeting large VMS companies. I believe that could help Constellation Software continue growing into an industry leader over the coming decade. In my opinion, as long as Mark Leonard continues to lead this company, Constellation Software is a no-brainer growth stock for your portfolio.
A financial company for your portfolio
Brookfield Asset Management (TSX:BAM.A) is the second growth stock that new investors should consider buying today. This is an interesting entry for this article, because I think a lot of investors don’t see Brookfield as a growth stock. However, I strongly believe that it is. Brookfield operates a portfolio consisting of more than US$750 billion of assets under management.
What’s even more impressive than the size of its portfolio is how fast Brookfield’s portfolio has grown. Over the past four years, Brookfield’s portfolio has grown at a CAGR of more than 24%. That means, if it can continue this pace, Brookfield could boast an asset portfolio totaling more than US$1 trillion in just a couple of years. Led by famed executive Bruce Flatt, Brookfield appears to be one of the most well-run companies on the TSX. This steady and reliable compounder of wealth should feature in your portfolio.
