Investing in growth stocks could be a smart strategy if you’re looking for ways to boost your retirement savings. Several TSX growth companies have the potential to increase their revenue and earnings at a faster rate than the average market in the coming years as the demand outlook for their products and services looks strong. Moreover, such growth companies also reinvest their profits into expanding their business, developing new products, or entering new markets, which could fuel a rally in their share prices and help you get solid returns to retire early.
However, selecting the right growth stocks to invest in for the long term might not be an easy task. Before investing your hard-earned money in any stock, you should ideally consider factors such as the company’s competitive advantage, profitability, and growth prospects. To help you with this, I have picked two TSX-listed growth stocks with strong fundamentals that could deliver outstanding returns in the long run. These are Descartes Systems (TSX: DSG) and Pet Valu (TSX: PET). Now, let me quickly explain why I think these two stocks could help you retire early.
Descartes Systems stock
Descartes Systems is a Waterloo-based company that primarily focuses on providing technological solutions to improve supply chain and logistics operations. It currently has a market cap of $10.7 billion as its stock trades at $125.43 per share with 12.7% year-to-date gains.
In the last 10 years, DSG stock has outperformed the broader market by a huge margin, yielding an eye-popping 736% positive return. By comparison, the TSX Composite benchmark has gone up by only around 55% during these 10 years.
Descartes’s consistently improving profitability and expanding revenue base could be the primary reason for its strong stock returns. For example, in the last five fiscal years (ended in January 2024), the company’s revenue soared by roughly 108%, from $275 million to US$573 million. Its adjusted annual earnings surged by 235% during the same period, from US$0.40 per share to US$1.34 per share. More importantly, its adjusted net profit margin has also expanded from just 11.4% in its fiscal year 2019 to 20.2% in its fiscal year 2024.
These positive factors reflect Descartes’ ability to keep growing its profits in spite of economic difficulties, which could help this top-growth stock sustain its positive momentum.
Pet Valu stock
Pet Valu (TSX: PET) is another top TSX growth stock that could help multiply your retirement savings in the long run. It is a Markham-headquartered firm that sells a wide range of pet food and supplies, focusing mainly on dogs, cats, fish, and birds. With 758 locations nationwide, it provides high-quality products, including top brands and its own, alongside services like grooming, adoption, and self-serve spas.
PET stock started trading on the Toronto Stock Exchange less than three years ago, in June 2021. The company currently has a market cap of $2.2 billion as its stock trades at $31.37 per share, nearly 57% up from its initial public offering price of $20 per share.
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Even as macroeconomic challenges have affected the consumer spending environment of late, Pet Valu’s annual revenue in the last two years grew positively by more than 36%, while its adjusted earnings rose even at a higher rate of around 58%. As it continues to focus on expanding its network of distribution centers and stores in the years to come, the company’s financial growth trends are expected to improve, which could help this growth stock rally.
