Finding the high-flying growth stocks that have performed well in previous cycles is easy. However, determining how many of these high-flying stocks will continue to soar is a much more difficult endeavour.
The TSX is filled with a range of high-yielding and typically lower-growth stocks, compared to other markets. However, there are some high-growth names I think are worth considering right now.
These three stocks have the right mix of sustainable growth drivers and solid fundamentals I think could benefit investors during the next growth wave.
Shopify
An e-commerce giant that’s become synonymous with the Canadian tech sector, Shopify (TSX: SHOP) remains one of my high-conviction picks. The company’s core platform is a key e-commerce driver, allowing small- and medium-sized businesses to set up online shops. As the push for digital continues, Shopify should benefit from this longer-term trend.
The company’s financial picture has improved dramatically, with investors largely upgrading their growth expectations for this stock. However, a recent dip may provide a solid entry point for investors. Despite 26% year-over-year revenue growth this past quarter and strong subscription solutions performance, this is a stock that looks stuck in the mud. However, when the next growth cycle comes around, SHOP is a stock I think could really fly. Keep an eye on Shopify here.
Manulife Financial
A much more boring stock than that of Shopify, Manulife Financial (TSX: MFC) is an insurance giant that continues to perform well. The stock is up big on a year-to-date basis, as interest-sensitive names continue to see strong buying pressure. The question is whether this upside momentum can continue.
I think it can. Manulife’s diversified revenue model and geographic diversification means this isn’t just any old insurance company. Manulife has diversified into wealth management and other lucrative businesses, serving more than 35 million customers globally.
I think this global growth story has more room to run. Manulife saw a net profit increase of 18% over the past year, driven in part by its expansion into China. As more Chinese consumers seek out life insurance options and Manulife grows its presence in this market and others, the upside potential for this name is significant.
Loblaw
Loblaw (TSX: L) is among the leading Canadian grocery retailers that’s seen impressive growth in recent years. One look at the stock chart below and it becomes clear that having a near-monopoly in the Canadian market can be lucrative.
Aside from the company’s core retail business, Loblaw is also a leading pharmacy, grocery, and merchandise retailer in Canada. In addition, the company offers financial services, such as credit card services and guaranteed investment certificates. The grocery retailer also carries robust private label assortments, like President’s Choice and No Name.
In February 2024, Loblaw reported its fourth-quarter performance of 2023, highlighting impressive growth in its revenue and adjusted EBITDA by 3.7% and 9.4%, respectively. Despite challenges, Loblaw continues its strive to drive more traffic, as its food and drug retail segments achieve same-store sales. In addition, the company plans to expand its operations by opening 40 new stores. This strategy will help Loblaw to increase its revenue and profit over time, potentially leading to continued outperformance.
