Some investors remain nervous about the volatility surrounding equity markets. The majority of investors expect the stock market to remain volatile in 2023 due to the threat of recession. But every economic downturn is eventually replaced by a multi-year bull run in which you can potentially create generational wealth.
It is impossible to time the market bottom. So, you should now consider buying shares of quality growth stocks trading at a lower valuation. Growth stocks have the potential to derive outsized gains in a bull market as investor sentiment improves.
So, here are three top growth stocks you can buy and benefit from solid gains in the upcoming decade.
CrowdStrike stock
Part of the cybersecurity vertical, CrowdStrike (NASDAQ: CRWD) should be on your shopping list today. CrowdStrike offers enterprises a wide portfolio of products that include identity protection, cloud security, and observability.
CrowdStrike has successfully expanded its customer base and increased engagement over the last few years. As a result, it increased revenue from US$481 million in fiscal 2020 to US$2.2 billion in fiscal 2023 (ended in January).
Around 62% of CRWD customers use at least five products, while 22% use seven or more products, indicating a strong engagement rate. The company expects its total addressable market to surpass US$75 billion by 2026, providing it with enough room to fuel top-line growth.
CrowdStrike ended fiscal Q4 with annual recurring revenue of US$2.6 billion and reported more than US$200 million in free cash flow.
Analysts tracking CRWD stock expect it to surge 45% in the next 12 months. Adjusted earnings are also forecast to double from US$1.54 per share in fiscal 2023 to US$3 per share in fiscal 2025.
Aritzia stock
Aritzia (TSX: ATZ) designs and sells apparel as well as accessories for women in North America. In Q4 of fiscal 2023, Aritzia increased net revenue by 43.5% year over year to $637.6 million, which is exceptional considering the current economic environment.
The uptick in sales was tied to Aritzia’s rapid expansion as it ended fiscal 2023 with 114 boutiques, up from 106 stores in fiscal 2022. Comparatively, e-commerce sales grew by 50.8% year over year to $275 million.
However, due to rising costs and an inflationary environment, the company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) was up by just 16% in fiscal 2023.
ATZ stock is priced at 17 times forward earnings, which is very cheap. The women’s retailer is on track to expand profit margins by 22.5% annually in the next five years.
Given analyst price target estimates, ATZ stock is trading at a discount of 80% right now.
Softchoice stock
The final growth stock on my list is Softchoice (TSX: SFTC), a small-cap TSX gem. Priced at a market cap of $930 million, Softchoice aims to digitize the operations of enterprises across sectors.
With a total addressable market of $300 billion, Softchoice has a massive opportunity to increase sales in the upcoming decade. Priced at 15.5 times forward earnings, SFTC is forecast to increase earnings by 14% annually in the next five years.
This TSX tech stock pays shareholders an annual dividend of $0.44 per share, indicating a forward yield of 2.8%.
