Forget the Magnificent 7: Buy the Canadian Terrific 3

I’m going to highlight the three companies I think should comprise the “Canadian terrific three” and why these stocks are worth a look.

| More on:
four people hold happy emoji masks

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The so-called “Magnificent Seven” represents a group of U.S. technology stocks that have dominated the market. Most are aware of the rise of many of these top mega-cap tech names. Indeed, it does appear we’ve entered yet another tech-driven bull market rally, with leadership becoming increasingly concentrated.

That can be a good and bad thing. For investors looking at valuations, it’s true that the highest-growth companies out there have become among the most expensive.

The good news is that there are a number of terrific growth stocks outside of the U.S. investors may want to consider. The following three companies are ones I’m going to to dub the “Canadian Terrific Three.” Here’s why I think these companies may be worth considering in relation to their high-growth U.S. peers.

Shopify

Shopify (TSX:SHOP) is one the largest e-commerce platform providers in the world. The company’s core software-as-a-service platform allows small- and mid-sized businesses to set up online shops and participate in the growth we’re seeing in the e-commerce sector. Since its post-pandemic decline, Shopify has performed well, though not to the extent of many of its U.S. peers.

Created with Highcharts 11.4.3Shopify PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

I think that could change over time. The company’s revenue growth rate of 23% year over year in the first quarter (Q1) remains strong, with gross merchandise value increasing to US$60.9 billion. That’s no small feat. As the company’s ecosystem continues to grow, its transaction-based fee model stands to provide excellent operating leverage for investors.

If one believes Shopify can continue to claw additional market share in the $8.1 trillion global e-commerce sector over the long term, this is a name to pick up on the cheap, in my view.

Constellation Software

Constellation Software (TSX:CSU) is a Canadian giant specializing in developing and customizing software for public and private-sector banks. The company acquires, builds and manages vertical-specific businesses across the public and private sectors.

Created with Highcharts 11.4.3Constellation Software PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Constellation’s recent results have been similar, providing top-line growth of 23% to more than $2.3 billion this past quarter. The company is increasingly profitable and has seen its profit margin surge to 45%. As the company continues to acquire more small and mid-sized software companies, I certainly think there’s plenty of room for additional top- and bottom-line growth. And with a balance sheet that remains strong, this is likely to remain the case.

Constellation Software has grown over time due to its ability to acquire its way to growth. However, on the organic front, growth has materialized nicely as well. Over the long term, this is a business model that will continue to work. Accordingly, despite its relatively high valuation, CSU stock is one I like right now.

Boyd Group

Boyd Group (TSX:BYD) is a glass repair and auto body service conglomerate. Based on Canada, the company’s footprint in the United States is also massive, operating under the Gerber Colission and Glass banner in this market.

Created with Highcharts 11.4.3Boyd Group Services PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Boyd Group has seen a slowdown in its growth rate this past quarter due in part to the company’s ever-growing size and scale in this industry. Like Constellation, Boyd operates a growth-via-acquisition model, consolidating the fragmented auto body sector in North America. The thing is, there’s perhaps even more growth potential in this space, with thousands of smaller chains and individual mom-and-pop run shops looking to sell as their founders age.

The most notable factor supporting this company’s valuation is its net income growth of nearly 8% to US$353 million this past quarter. At a valuation of $5.5 billion, this is a stock that could be among the cheapest high-growth Canadian names on this list, and one I think investors can’t go wrong owning for the long term here.

Should you invest $1,000 in Artis Real Estate Investment Trust right now?

Before you buy stock in Artis Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Artis Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Boyd Group Services and Constellation Software. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »