Canadian stocks continue to face big ups and downs in 2023, as investors remain worried about the possibility of more interest rate hikes and sticky inflationary pressures. This is one of the key reasons why most growth stocks in Canada, especially from the tech sector, are struggling to hold their gains after witnessing a sharp recovery earlier this year.
In this article, I’ll highlight two of such fundamentally strong growth stocks you can consider buying if there is another big stock market selloff.
Shopify stock
Although Shopify (TSX:SHOP) stock currently trades with handsome 52% year-to-date gains at $71.36 per share, it has gone down by about 21% in September so far, trimming its market cap to $91.8 billion. In its September meeting, the U.S. Federal Reserve held the interest rates steady but didn’t deny the possibility of more interest rate hikes, if needed, to ease underlying inflation. This factor triggered a selling spree in tech stocks.
Notably, the Ottawa-headquartered e-commerce giant has been exceeding Street analysts’ top- and bottom-line expectations for the last four consecutive quarters. In the second quarter of 2023, Shopify reported a solid 30.8% YoY (year-over-year) positive growth in its total revenue to US$1.7 billion, with the help of a 35% YoY increase in its merchant solutions revenue. To add optimism, its monthly recurring revenue at the end of the second quarter jumped 30% YoY to US$139 billion. With this, the tech company posted a US$0.14 per share in adjusted quarterly earnings, crushing analysts’ estimate of US$0.05 per share by a wide margin.
Despite economic growth-related external factors driving it lower lately, Shopify’s strong financial growth trends and expanding portfolio of e-commerce offerings make it a really attractive Canadian growth stock to own for the long term.
BlackBerry stock
With its nearly 54% year-to-date gains, BlackBerry (TSX:BB) is among this year’s top-performing TSX stocks as of September 25. Just like Shopify, however, this growth stock has also seen around 10% value erosion in the ongoing month due mainly to broader market weakness. Besides these external factors, changes in investors’ expectations from its upcoming quarterly earnings event, scheduled for September 28, could be another reason for keeping BB stock volatile lately.
According to the preliminary second quarter of its fiscal year 2024 (ended in August) results, BlackBerry expects to post around 9% sequential growth in its IoT (Internet of Things) segment revenue. But its cybersecurity segment continues to struggle due mainly to macroeconomic concerns, with its second-quarter sales expected to be lower than estimated.
As more businesses globally are building their online presence now, they are becoming vulnerable to cyber threats. That’s the main reason why the demand for BlackBerry’s enterprise cybersecurity software solutions could recover fast in the coming years.
Moreover, you can expect its IoT business unit to also post incremental growth in the long run as the company continues to expand its presence in advanced technological solutions for the automotive industry. Given that, if a selloff takes this fundamentally strong Canadian growth stock further down, you may consider buying it at a bargain to hold for the long term.
