The Toronto Stock Exchange has yet to produce a company worth $1 trillion. In the U.S., Apple, Microsoft, and NVIDIA are US$2 trillion club members already. Amazon.com, Alphabet, and META Platforms, all high-growth stocks, could be members soon.
Canada isn’t lacking in growth stocks, although hitting one trillion in market cap is a moonshot. Still, three companies with high-growth potential could achieve the milestone in 10 years (or maybe more).
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E-commerce giant
In March 2020, Shopify (TSX:SHOP) dethroned Royal Bank of Canada as the TSX’s most valuable company. The e-commerce giant’s market cap surged to $121.3 billion. Unfortunately, the reign was short-lived as the big bank reclaimed the top position one year later.
Shopify’s market cap stands at $136.66 billion as of this writing. However, the growth trajectory of the TSX’s tech superstar has been superb in the last eight years. From a market cap of US$2.05 billion in 2015, it grew 4,798% to $100.4 billion in 2023. 1,000% growth in 10 years should catapult Shopify to $1 trillion by 2034.
Shopify is trending again following the 26% revenue growth in 2023 to US$7.06 versus 2022. The full-year net income was US$132 million compared to the US$3.47 million net loss a year ago. In the fourth quarter (Q4), net income reached US$657 million versus US$623 million net loss in Q4 2022.
Moreover, it was the third consecutive quarter that revenue grew by more 20%. “It was a phenomenal year for Shopify,” said Harley Finkelstein, the company’s president. Notably, Shopify is the e-commerce platform of 45 of North America’s top 1,000 retailers, and 35% more merchants outside the region use its platform.
Finklestein added that the US$441 million revenue from offline sources, including offline subscriptions and point-of-sale hardware, was more than five times in 2019. One growth driver that Finklestein can’t avoid mentioning is artificial intelligence. He said Shopify launched artificial intelligence-powered tools to increase productivity and streamline administrative tasks.
Regarding stock performance, Shopify’s 119% return in 2023 lifted the TSX. At $105.97 per share today, the trailing one-year price return is 85%.
Dark horses
Constellation Software (TSX:CSU) could be the second Canadian high-growth stock to hit $1 trillion market cap in a decade or more after Shopify. As of March 13, 2024, the market cap is $79.93 billion. Performance-wise, it has better returns than Shopify in 3.01 years at +127.68 versus -25.53%. However, the share price is higher ($3,772.19).
The diversified software company caters to select clients in the public and private sectors in over 100 countries. In 2023, revenue, net income, and free cash flow increased 27%, 10%, and 36% year over year to US$8.4 billion, US$565 million, and US$1.2 billion, respectively. Unlike Shopify, Constellation Software has been highly profitable in the last four years.
Alimentation Couche-Tard (TSX:ATD) might have a slim chance of hitting $1 trillion, but it’s not inconceivable. The global footprint of this $80 billion convenience store is growing with ongoing acquisitions. From an investment standpoint, this consumer staple stock is rock solid. At $83.08 per share, the overall return in 10.01% years is 521.9%.
Mean feat
A $1 trillion market cap is a feat, but it is not impossible for Shopify or maybe Constellation Software and Alimentation Couche-Tard in 10 years or more.
