Celestica (TSX:CLS) is one of the best-performing Canadian stocks over the past year. Shares of this design, manufacturing, hardware platform, and supply chain solutions provider have gained more than 189% in one year, outperforming the broader equity markets by a wide margin.
The significant growth in Celestica stock is driven by the reacceleration of its top-line growth rate, ongoing productivity initiatives to drive improved profitability, flexible balance sheet, and its diversified commercial portfolio with a focus on high-margin, defensible businesses. Further, its accretive acquisitions in high-growth end markets augur well for growth.
While Celestica stock will likely benefit from sustainable growth in its revenue and profitability, the demand softness in its industrial business and communications end market could remain a drag. Further, its stock appears expensive, given the recent rally.
Thus, instead of Celestica stock, investors could consider more promising bets such as Shopify (TSX:SHOP) and goeasy (TSX:GSY). Let’s look at the factors that support my bull case and make these unstoppable stocks better buys.
Shopify
Shares of the technology giant Shopify have gained over 82% in one year, reflecting its durable revenue growth rate despite macro headwinds. Looking ahead, Shopify stock is poised to benefit from the ongoing strength in its gross merchandise volume (GMV), increased number of active merchants on its platform, and higher subscription pricing.
Shopify’s Merchant Solutions business will likely gain from the growing penetration of Shopify Payments solutions and momentum in other Merchant Solutions such as Capital, Markets, and Installments. Meanwhile, its Subscription Solutions revenue is likely to be driven by growth in the number of merchants and a higher pricing strategy.
While the company’s top line could continue to deliver strong growth, its bottom line will likely benefit from its lower headcount, disciplined ad spending, and transition toward an asset-light business model. Overall, Shopify’s dominant positioning in the e-commerce sector, its growing active merchant base, increased adoption of its products, and improving take rate augur well for growth.
goeasy
goeasy is a must-have stock to create wealth in the long term. Shares of this non-prime lender have grown at a compound annual growth rate (CAGR) of 29.6% in the past decade, beating the broader market by a significant margin. This above-average growth is backed by its ability to consistently generate solid financials.
Notably, this financial services company’s revenue sports a 10-year CAGR of 17.7% in the past decade. During the same period, its adjusted EPS (earnings per share) increased at a CAGR of impressive 29.5%.
The company benefits from diversified revenue sources, a large subprime lending market, solid credit performance, and operating efficiency. In addition, its strong balance sheet and diversified funding sources bode well for loan growth, which will drive its top and bottom lines in the coming years.
goeasy is poised to benefit from product, channel, and geographic expansion. Higher loan originations will support its top line. Meanwhile, steady credit and payment performance will cushion its bottom line and drive its share price higher.
goeasy has increased its dividend for nine consecutive years. Meanwhile, its solid earnings base suggests that goeasy will likely enhance its shareholders’ returns through increased dividend payments in the coming years. Also, its next 12-month price-to-earnings multiple of 9.8 looks compelling, considering its double-digit earnings-growth rate and a decent yield of 2.4%.
