Much to the delight of many investors, the Canadian stock market is finally starting to heat up. The S&P/TSX Composite Index is nearing a gain of 5% on the year.
Investors who are looking for a bargain may want to act quickly, though. It wasn’t long ago that the TSX was loaded with high-quality stocks trading at discounted prices. Today, those deals aren’t as easy to come by.
Loading up on growth stocks today
Don’t get me wrong; there are still discounted growth stocks on the TSX to take advantage of right now. However, growth investors should not be neglecting high-quality stocks that are trading at premium prices. Just because a stock isn’t trading at a bargain price doesn’t mean you need to wait for a pullback to load up.
I’ve reviewed two Canadian growth stocks that have a history of delivering market-beating returns. One stock is trading at a premium, while the other has largely struggled over the past couple of years.
Together, the duo of companies can provide an investment portfolio with a mix of growth potential, diversification, and passive income.
Growth stock #1: Constellation Software
At a share price that’s nearing $4,000, Constellation Software (TSX:CSU) requires a steep price of entry. There aren’t many Canadian stocks trading at a price tag this high.
That being said, investors need to keep in mind that a high share price does not necessarily mean a high valuation. The stock price could be reduced dramatically at any point with a stock split, which essentially increases the number of shares outstanding and lowers the individual value of each share.
For inventors who are willing to stomach the high price, there’s a lot to like about Constellation Software. The tech giant’s market-beating track record is not rivalled by many on the TSX. Shares are up a market-crushing 240% over the past five years.
It may be hard to believe, but a 200% return over the past five years is actually a slowdown for Constellation Software. As the company is now valued at an $80 billion market cap, growth has understandably slowed as the business continues to mature.
Constellation Software may be past its monster multi-bagger years, but it’s nowhere near done outperforming the market.
If you’re looking for a steady market-beater, you cannot go wrong with this tech stock.
Growth stock #2: Brookfield Renewable Partners
Brookfield Renewable Partners (TSX:BEP.UN) has not enjoyed the same type of success as Constellation Software in recent years. Alongside many others in the sector, the renewable energy stock has struggled since early 2021, witnessing its share price get cut in half during that period.
As miserable as it’s been for renewable energy investors over the past three years, there’s still plenty to be optimistic about over the long term.
Even with Brookfield Renewable Partners’s 50% pullback, the growth stock has still outperformed the Canadian stock market over the past five years. And that’s not even including dividends, either.
One positive of the pullback is that it has sent the company’s dividend yield soaring. At today’s stock price, the dividend is yielding a whopping 6%.
If you’ve been thinking of adding a renewable energy stock to your portfolio, now is the time to consider it. These bargain prices won’t be around forever.
