2 Canadian Growth Stocks to Buy and 1 to Sell

Are you interested in growth stocks? Here are two picks to buy and one to sell!

If you’re hoping to make it big in the stock market, then you should definitely consider focusing on growth stocks. By definition, these are companies that have the ability to outpace the market in returns. They do this by constantly innovating and providing products or services that justify a continually rapidly growing revenue. Fortunately, the Canadian stock market offers investors a plethora of options. In this article, I’ll discuss two Canadian growth stocks to buy and one to sell today.

Buy this top growth stock right now

If I could only buy one growth stock for the rest of the year, it would be Constellation Software (TSX: CSU). Despite its name, Constellation Software doesn’t have the most exciting business. This company acquires vertical market software (VMS) businesses. It also provides the resources necessary to turn those acquisitions into exceptional business units. Constellation Software’s combo of selective acquisitions and outstanding guidance has proven to be very successful.

Over the past year, Constellation Software stock has gained about 63%. While that may seem extraordinary, I’d say investors shouldn’t be surprised. After all, we’re talking about a stock that has gained 240% over the past five years and nearly 20,500% since its initial public offering in 2006! In my opinion, as long as Mark Leonard, the company’s founder, continues to lead Constellation Software, this stock is an easy buy.

Another great Canadian growth stock worth buying

If you’re looking for a growth stock that could grow even more than Constellation Software over the next decade, I’d tell you to consider looking into Shopify (TSX: SHOP). Yes, this stock has a much larger market cap than Constellation Software. However, I think its growth potential is astronomical.

Shopify is a leading company within the global e-commerce space. Very few Canadian companies have managed to impact that global economy like Shopify has. As the e-commerce industry continues to grow, I believe so too will Shopify’s business. The company has done a great job of increasing its penetration of the massive U.S. e-commerce market and it has been reflected in its stock price. Over the past year, Shopify stock has gained 85%.

I would sell shares of this company today

Unfortunately, not all stocks can be winners. That’s just the nature of the stock market. With that said, I think it’s time for investors to cut ties with Nuvei (TSX: NVEI). For those who aren’t familiar, Nuvei is a payment processor. The company offers various solutions that can help merchants accept various forms of payment.

In its most recent earnings call, the company reported US$1,189.9 million in revenue. That represents a year-over-year increase of about 41%. However, it should be noted that only 9% of that growth was organic revenue growth. I think that second figure is what investors have been focusing on and is what has made them decide that this growth stock simply isn’t growing fast enough. As a result, Nuvei stock continues to fall and has now dropped 39% over the past year.

Fool contributor Jed Lloren has positions in Constellation Software and Shopify. The Motley Fool has positions in and recommends Nuvei and Shopify. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

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