My No. 1 Best Canadian Growth Stock to Buy Right Now

Here’s why Shopify (TSX:SHOP) remains among the top growth stocks long-term investors should consider as a way to play the Canadian market.

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As the world embraces digitization to get jobs done easily and efficiently, the demand for switching online with e-commerce platforms is growing among investors. Shopify (TSX:SHOP) is one such leading e-commerce platform popular among both sellers and buyers. 

This company provides e-commerce platforms and services in Canada, Africa, the U.S., the Middle East, Europe, Asia Pacific, and Latin America. Here’s why I think Shopify remains among the top growth stocks investors should consider in this current environment.

A great way to play declining interest rates

Right now, it appears investors are not betting on if interest rates will decline but when.

The Bank of Canada has held interest rates steady for a few meetings now, and recent weakness in the housing market, as well as financial pressure on other parts of the economy, may pressure rates to come down in the coming quarters. If that’s the case, it’s great news for long-duration assets, and companies with years of growth to be discounted back to the present day.

Shopify is certainly one stock that benefits in a low interest rate environment. Indeed, SHOP stock surged during the 2021 rally, supported by record-low interest rates and a surge in interest among the fastest-growing stocks.

Yes, growth has slowed, but Shopify still outperforms relative to other Canadian tech stocks. As demand for higher-growth equities comes into play, this is a stock that should see strong buying interest in the coming quarters.

Earnings per share set for some serious growth

It’s not just Shopify’s top line that is expected to grow at a market-beating rate. Analysts expect the company’s earnings per share to surge more than 340% on a year-over-year basis to $0.31.

While that’s still relatively low, and the company will need to churn out higher and higher earnings in the future, the company’s valuation will largely become dependent on earnings moving forward. Thus, for those who believe in Shopify’s high-margin business and its ability to produce profits in the future, this is a company worth looking at right now.

Notably, Shopify’s earnings are growing at a rate that’s nearly double its revenue at the time of writing. This suggests that, much like other mega-cap tech stocks, a focus on profitability is taking hold. That’s great for fundamentally conscious growth investors.

Wrapping it all up

Before its drastic fall in 2021, Shopify’s share price surged to an all-time high of around $228 per share. A return to those levels would suggest a doubling of this company’s current share price from existing levels.

I’m not saying that’s in the cards for 2024, but I know some bulls are betting on a resurgence around the corner. If interest rates come down, the macro environment remains conducive to growth stocks, and Shopify can continue to pump out solid top- and bottom-line growth, this is a growth stock that could really fly this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

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