In a bull market, the equity markets will have increased 20% from its long-term low point. Economic growth, a strong labor market, and higher consumer confidence are some of the characteristics of a bull run. It is impossible to predict when a bull run will begin.
Meanwhile, the pause in interest rate hikes and inflation showing signs of cooling down have improved investors’ confidence, thus driving the equity markets higher. With the S&P/TSX Composite Index trading 13.2% higher from its October 2022 lows, it would be an ideal time to prepare for a period of market strength.
Here are three top growth stocks you should consider investing in to earn superior returns in a bull market.
Shopify
Shopify (TSX:SHOP), which offers essential internet infrastructure to businesses, witnessed healthy buying last month, with its stock price rising over 50%. Its solid third-quarter performance and raising of its 2023 guidance drove its stock price. Its revenue grew 25% to $1.7 billion. However, adjusting for the sale of its logistic business, its year-over-year growth stood at 30%. During the quarter, the company facilitated sales of $56.2 billion from its platform, while Shopify Payments processed 58% or $32.8 billion of the total transactions.
Meanwhile, the company’s gross margins also expanded by 4.1% to 52.6%, primarily due to the dilution of its logistics business. Further, the company’s operating income stood at $122 million compared to an operating loss of $346 million in the previous year’s quarter. The company also generated $276 million in cash flows and closed the quarter with cash and marketable securities of $4.9 billion. So, its financial position looks solid to fund its growth initiatives.
Meanwhile, Shopify is investing in developing new products to enhance its merchants’ experience. Besides, the company is also working on improving its operational efficiency, which could boost its financials in the coming quarters. Management has provided healthy fourth-quarter guidance, with its revenue expected to grow in the high teens. Besides, its gross margins could increase 300 to 400 basis points year over year to 46%. So, its growth prospects look healthy, making it an attractive buy.
Nuvei
Another growth stock I am bullish on would be Nuvei (TSX:NVEI), a payment processing company that facilitates businesses to accept digital transactions, including next-generation payment methods. It also reported an impressive third-quarter performance last month, with its revenue and adjusted EPS (earnings per share) growing by 55% and 9%, respectively.
The payments processor also generated an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $110.7 million, representing a 36% increase. Further, its adjusted EBITDA margins expanded by 40 basis points to 36.3%. Amid the growing popularity of digital payments and its growth initiatives, the company’s management projects its revenue to grow at a 15–20% rate in the medium term while expanding its EBITDA margin to 50% in the long run. Despite its healthy growth prospects, Nuvei trades at 10.2 times the next four quarters’ projected earnings, making it an attractive buy.
WELL Health Technologies
With the increased adoption of telehealthcare services and digitizing of clinical practices, I have selected WELL Health Technologies (TSX:WELL) as my final pick. It reported an impressive third-quarter performance, with its revenue and adjusted EBITDA to its shareholders growing by 40.2% and 13.2%, respectively. The digital health solutions provider had 1 million patient visits and over 1.5 million patient interactions during the quarter.
Meanwhile, the company is investing heavily in developing AI-powered (artificial intelligence-powered) products, which could enhance healthcare professionals’ experiences. Further, the company continues to make strategic acquisitions to expand its geographical footprint and strengthen its capabilities. Amid these growth initiatives, the digital healthcare company’s management is confident of posting $900 million of revenue in 2024, representing an 18% increase from its 2023 guidance. Meanwhile, the company trades at an attractive NTM (next 12 months) price-to-sales multiple of 1, making it an excellent buy.
