Canadian stock investors got a big relief earlier this week after the Bank of Canada decided to hold interest rates steady for now, as it expects inflation to continue to ease in the next few months. While it projects the GDP (gross domestic product) growth to remain weak for the rest of this year, the central bank expects the GDP growth to strengthen gradually in 2024.
These factors point to the possibility that the Canadian economy will remain stronger than earlier projected, which should help high-growth stocks regain investors’ confidence. That’s why it could be the right time for you to buy some fundamentally strong growth stocks for the long term before they rally.
In this article, I’ll highlight two of the best TSX stocks that might witness renewed buying with the diminishing possibility of more rate hikes.
BlackBerry stock
BlackBerry (TSX:BB) could be one of the best growth stocks on the Toronto Stock Exchange to consider right now. On the one hand, this Waterloo-headquartered software company’s stock has already risen 33.8% in 2023 so far to currently trade at $5.90 per share. However, BB stock has lost nearly 30.3% of its value in the last year, as rising interest rates triggered a massive selloff in 2022.
In the last few quarters, BlackBerry’s enterprise cybersecurity software sales, which is currently its largest revenue stream, have seen negative growth due to the challenging macroeconomic environment. On the positive side, the sales of its IoT (Internet of Things) segment continued to increase, reflecting the strength of its IoT portfolio, which includes technological solutions for the automotive industry.
I expect BlackBerry’s IoT segment sales to become a major contributor to its total revenue in the coming years, as it continues to focus on developing advanced machine learning and artificial intelligence-based technological solutions for futuristic mobility. To give you a quick example, BB’s intelligent vehicle data platform, IVY, is likely to be generally available for automakers around mid-2023. These developments could play a key role in improving its financial growth trend in the coming years and help this TSX stock soar.
Shopify stock
Just like BlackBerry, Shopify (TSX:SHOP) was also among the worst-performing TSX stocks last year, as high inflationary pressures and aggressive rate hikes led to a crash in its share prices. After crashing by nearly 73% in 2022, SHOP stock is now up 29.5% on a year-to-date basis to trade at $60.89 per share with $73.6 billion in market capitalization.
As coronavirus-driven restrictions eased gradually in the last two years, Shopify’s sales growth rate started to drop. Despite subsiding pandemic-driven demand and inflationary pressures, the Canadian e-commerce giant still maintains healthy double-digit sales growth. In 2022, its revenue inched up 21.4% year over year to US$5.6 billion. With this, SHOP reported adjusted earnings of US$0.04 per share for the year against analysts’ expectations of a US$0.04 loss per share.
Moreover, Shopify’s continued efforts to innovate to make its e-commerce offerings more attractive for merchants should help its top- and bottom-line growth accelerate in the coming years, making it a great TSX stock to own for the years to come.
