In my opinion, if you’re an individual with a long investment horizon, then you should focus on growth stocks. This is because, over the short term, growth stocks tend to be very volatile. However, in the long term, these stocks have the potential to outperform the broader market by a wide margin. Fortunately, the Canadian stock market offers investors a wide range of outstanding growth stocks to consider buying.
In this article, I’ll discuss my top TSX growth stock for April 2023.
What’s my top growth stock this month?
I think Shopify (TSX:SHOP) poses a very interesting opportunity for investors today. For those that are unfamiliar, this company provides merchants of all sizes with a platform and many of the tools necessary to operate online stores. Because of the wide range of solutions it offers, Shopify can cater to everyone from the first-time entrepreneur to large-cap enterprises like Netflix.
For the first few years of its time on the public markets, Shopify stock soared. Between May 2015 and November 2021, the stock gained more than 6000%. In addition, Shopify was highlighted by many publications including the TSX30 for its outstanding performance. However, since hitting its all-time highs in 2021, Shopify stock plummeted, falling more than 80%.
Fortunately for investors, Shopify stock seems to be on the rebound. Since October of last year, Shopify stock has nearly gained 80%. Today, it still sits about 70% lower than its all-time high. However, the stock could be very appealing to those that are interested in a massive discount on an amazing company.
Why should you invest in Shopify?
As it stands, Shopify is one of the largest companies within the rapidly growing e-commerce industry. It holds about a 10% market share in the massive U.S. e-commerce industry. The company also claims millions of merchants across more than 175 countries.
In terms of its financial position, Shopify looks attractive. The company’s revenue has grown each year. In 2022, Shopify reported US$5.6 billion in revenue, which represents a year-over-year increase of about 21%. Much of that revenue comes from recurring sources too, which gives Shopify a predictable and stable source of revenue. Over the past five years, Shopify has managed to increase its monthly recurring revenue at a compound annual growth rate of 30%.
Another thing that I particularly like about Shopify is that the company is founder led. Historically, founder-led companies have managed to outperform companies led by non-founders. Tobi Lütke founded the Shopify when he discovered a problem when trying to sell snowboards online and still serves as the company’s chief executive officer today.
If you’re interested in buying a growth stock this month, then I would suggest Shopify. It’s a massive company in a growing industry. It’s founder led and continues to show outstanding growth in its financials. Shopify stock currently offers investors a massive discount compared to its all-time highs.