Buying undervalued growth stocks is a smart way to increase portfolio value. However, to do so, investors must identify companies with solid financials and long-term growth prospects, which can facilitate a significant price rise down the line. In this regard, there are two potentially explosive stocks to buy in September.
Explosive stocks to buy in September: Shopify
Shopify (TSX:SHOP) is a Canadian e-commerce giant. Apart from its home country, this company has a significant market share in key markets in the U.S., Middle East, Asia Pacific, Latin America, and Africa. Notably, the company recently signed an agreement with Amazon to integrate “‘”Buy with Prime” on its platform.
This partnership will help U.S. merchants benefit from Amazon’s top-of-the-line fulfillment network. Customers will have the option of buying with Prime while checking out from the Shopify app, receiving lightning-fast deliveries.
Additionally, Shopify has planned on integrating Solana Pay on its platform. This will enable customers to avail digital currency-based payment options and merchants to get instant payment in USD stablecoins, without any extra charges.
Apart from this, Shopify had a spectacular performance in the second quarter (Q2) of 2023. Its gross merchandise volume reached US$55 billion, which is a 17% rise from last year’s numbers. The company’s merchant solutions revenue and subscription solutions revenue increased to US$1.3 billion and US$444 million, indicating impressive growth of 35% and 21%, respectively.
Constellation Software (TSX:CSU) is an international mission-critical software solutions provider. Apart from Canada, it runs operations in the United States, U.K., and other parts of Europe. It’s yet another Canada-based tech giant that receives the vast majority of its revenue and earnings from outside the country.
Constellation’s long-term growth has been impressive, and is evidenced by its stock chart. Via acquiring and integrating various vertical software companies into its portfolio, Constellation has consistently increased return on equity metrics, improving shareholder value and generating recurring cash flows which are then parlayed into future acquisitions down the road.
This strategy has clearly paid off, and continues to provide results that surprise to the upside. Constellation reported strong Q2 numbers on Aug. 11, bringing in revenue growth of 26% (to US$2.04 billion) and cash flow from operations growth of 58% (to US$123 million). These numbers simply blew away my expectations, and are the reason why CSU stock has retained its upward trajectory.
Both Shopify and Constellation make great long-term holdings for investors looking for high-quality and explosive growth over the long term. Both operate in sectors with strong secular growth catalysts, and continue to retain dominant market positions in their respective markets.