Is Now the Right Time to Buy Growth Stocks?

Are you thinking for buying growth stocks? Find out if it’s the right time to do so!

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Growth stocks can be a very important to consider if you aspire to achieve financial independence. With those kinds of companies in your portfolio, investors could see outsized gains. Over time, that could help you achieve the kinds of returns you aspire to generate and perhaps even beat the market. However, over the past couple of years, many of the most popular growth stocks have struggled. Some have even fallen as much as 70% or 80% from their all-time highs.

With that in mind, some investors have been avoiding these stocks in hopes of finding better results elsewhere. In saying that, it’s fair for some investors to wonder if it’s finally the right time to buy growth stocks again. In my opinion, it is. I think some stocks are starting to show signs of recovery, and there are still some excellent deals to take advantage of. In this article, I’ll discuss two growth stocks that investors should consider buying today.

This stock is a proven winner

Constellation Software (TSX:CSU) is the first stock that I think investors should consider buying today. This may be one of the most successful stocks in Canadian history, gaining more than 12,500% since its initial public offering (IPO) in 2006. For those interested in the math, that represents a compound annual growth rate of about 33%. For those that are unfamiliar, Constellation Software is a tech conglomerate, which has made a name for itself as a serial acquirer of vertical market software businesses.

Investors had a tremendous opportunity to pick up shares at a nice discount. Through the first 10 months of 2022, Constellation Software stock fell about 22%. Needless to say, that’s very uncharacteristic of this stock, and investors should’ve taken note. Since hitting its low point in October 2022, Constellation Software stock has rallied about 27%. That tells me that investors are starting to put faith in growth stocks again, and Constellation Software has been a huge beneficiary.

Over the past year, this stock has only gained about 10%, so investors could still get in at a reasonable spot. I think this is a great stock to buy whether you’re a new or experienced investor.

One of the best stocks to watch over the next decade

If I could only pick one stock to hold for the next decade, it would likely be Shopify (TSX:SHOP). This is because I’m a very big believer in the growth potential that lies within the e-commerce industry. It’s projected that the industry could grow by 11.5% in the next four years. That would result in a market size of US$6.35 trillion. In an industry that massive, there are surely winners to be made and I think Shopify could be a really big one.

In my opinion, Shopify differentiates itself from its competitors with its impressive enterprise partnership network. By laying down that groundwork, Shopify provides its merchants with the option of easily linking their stores to the likes of Spotify, Meta Platforms, Walmart, YouTube, and more. In its fourth-quarter 2022 earnings presentation, Shopify reported that its fourth-quarter revenue had increased 26% year over year. If it can continue that kind of growth in the coming years, I think Shopify stock could be very rewarding for investors.

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.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Jed Lloren has positions in Constellation Software, Shopify, and Spotify Technology. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Constellation Software, Meta Platforms, Spotify Technology, and Walmart. The Motley Fool has a disclosure policy.

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