2 Top Growth Stocks in Canada for April 2023

Now’s the time to load up on growth stocks. Here are two tech companies that growth investors should have on their watch lists.

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Don’t look now, but we may already be riding the start of a new bull run. Volatility hasn’t slowed all that much in 2023 but we have seen stocks rebound after a disappointing year in 2022.

Growth stocks, particularly in the tech sector, were among the hard hit last year. Loads of beaten-down tech stocks continue to trade far below all-time highs, many of which were set in late 2021. But after a strong start to the year, these rare buying opportunities may soon be a thing of the past.

Year to date, the S&P/TSX Composite Index is trading just above positive territory. The Canadian stock market as a whole may be about flat in 2023, but many individual stocks have already enjoyed double-digit returns this year. And in the U.S., the gains have been even higher. After March ended on a high note, the tech-heavy Nasdaq Composite is now sitting at a return of close to 20% in 2023.

With that in mind, I’m looking to load up on discounted growth stocks while prices last. Here are two beaten-down picks that might not be trading at bargain prices for much longer.

Shopify

Shares of the tech-giant Shopify (TSX:SHOP), are up a market-crushing 30% year to date. And that’s even down from the 45% it was up in mid-February. Even with the hot start to the year, though, shares are still down about 70% from all-time highs set in late 2021.

Growth surged following the COVID-19 market crash and then came crashing down for Shopify, as did it for many of its tech peers too. Today, the stock is trading above pre-pandemic levels. And after a torrid start to the year, it’s looking like it’s ready to charge toward new all-time highs.

From a valuation perspective, Shopify is by no means a value stock. Even with a 70% drop from all-time highs, shares are still on the higher end of valuation compared to most Canadian growth stocks.

The bottom line is that if you’re looking to earn market-crushing returns, you’re going to need to pay up.

With a massive market opportunity still in front of Shopify, there’s definitely a reason to believe that it’s only a matter of time before this growth stock is back to consistently outperforming the market’s returns. 

Lightspeed Commerce

Very similar to Shopify, Lightspeed Commerce (TSX:LSPD) enjoyed massive returns through most of 2020 and 2021 but spent the majority of 2022 returning those gains.

However, one difference is that Lightspeed has not yet seen the same type of surge as Shopify has in 2023. As a result, investors may be able to be a bit more patient with Lightspeed. We haven’t seen any strong signs of a bull run starting just yet, but that could change very shortly.

The stock has dropped a staggering 80% since September 2021. However, I’d strongly argue that the drop in share price is not a reflection of the health of the business. Lightspeed management continues to focus on expanding both the company’s product offering and international presence, which explains why revenue growth continues to soar, despite the falling stock price.

Lightspeed is loaded with growth potential and is still valued at a market cap of less than $10 billion. That’s one of the reasons why I confidently added to my long-term position several times last year.

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.

Fool contributor Nicholas Dobroruka has positions in Lightspeed Commerce and Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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