Growth stocks can be excellent positions to hold in a portfolio, simply because of the return potential they possess. However, it should be noted that these stocks tend to be much more volatile than dividend stocks. That means investors should be mentally prepared for any significant dip in value. In some cases, a dip in value should be welcomed, because it provides investors with a temporary discount when buying shares.
In this article, I’ll discuss three growth stocks I’d buy more of if they dip.
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This is my favourite growth stock
Of all TSX-listed growth stocks, none interest me as much as Shopify (TSX: SHOP). This is one of the largest e-commerce companies in the world. It provides merchants of all sizes with a platform and many of the tools necessary to operate online stores. Shopify’s platform is so impressive that large-cap companies like Netflix (NASDAQ: NFLX) have chosen it to power their online stores.
There are two things about Shopify that continue to impress me. First, it’s a founder-led company. Historically, founder-led companies have managed to outperform those led by non-founders. As long as Tobi Lütke continues to lead this company, I believe Shopify could continue to grow at a staggering rate. Second, Shopify’s enterprise partnership network gives merchants every opportunity to appear in front of consumers. With agreements with Meta Platforms, Spotify, YouTube, and more in place, I think Shopify merchants, and, in turn, its stock, will continue to succeed.
A blue-chip stock with market-beating potential
There’s a common misconception regarding growth stocks. It’s that investors need to take on massive amounts of risk in order to seek the highest growth rates. While it’s true that some newer and unproven growth stocks may fit that bill, it certainly doesn’t apply to all growth stocks. Some companies, like Constellation Software (TSX: CSU), manage to continue generating impressive growth rates, despite already being well-established in their industry.
Since its initial public offering in 2006, Constellation Software stock has managed to generate a return of more than 30% on an annual basis. One reason for Constellation Software’s impressive run may be its willingness to continue exploring new horizons. For much of its history, Constellation Software has focused on acquiring small- and medium-sized vertical market software (VMS) businesses. However, in 2021, the company announced that it would finally begin targeting large VMS businesses for acquisition.
That continued dedication to finding growth opportunities may help Constellation Software stay ahead of the market, in terms of gains, over the coming years. In addition, this company continues to led by its founder, Mark Leonard, who may very well be one of the most impressive executives of his generation.
One for the future
Finally, investors should consider buying shares in Brookfield Renewable (TSX: BEP.UN). This company is one of the largest producers of renewable utilities in the world. It operates a portfolio of assets with a generation capacity of 25 gigawatts (GW). Brookfield Renewable also boasts a development pipeline with a potential generation capacity of 110 GW.
This is an interesting stock, because it offers investors solid growth potential, while also distributing an impressive dividend. Brookfield Renewable has managed to increase its dividend distribution in each of the past 11 years at a rate of 6%. If you’re interested in a stock that operates in a rapidly growing industry, Brookfield Renewable could be the one for you.
