Growth stocks have the potential to compound your wealth. Therefore, investors should add a few top high-quality Canadian stocks to their portfolios to generate above-average returns. Thankfully, the TSX has several fundamentally strong growth stocks to help you generate substantial wealth and meet your financial goals faster.
So, if you plan to invest $3,000, here are three Canadian growth stocks that have the potential to deliver exceptional returns over time.
Shopify
Shopify (TSX:SHOP) is a compelling investment option for growth investors. The stock has delivered exceptional returns during the pandemic due to the spike in e-commerce demand. However, the recent moderation in growth rate and normalization in demand trends has weighed on the shares of this Canadian tech giant, which are down about 12% year to date.
Nevertheless, the company’s fundamentals remain strong, and it is poised to deliver above-average returns over the long term. My bullish outlook stems from the company’s ability to grow its share in the e-commerce space. Further, its ability to capitalize on the digital shift and deliver durable revenue growth bodes well for growth.
Shopify is consistently growing its merchandise volumes, which will boost its revenue. Furthermore, the introduction of new products and the growing adoption of its existing offerings, such as Shopify Capital and Payments, augur well for future growth. Additionally, Shopify’s shift towards an asset-light business, improvement in its take rate, and cost-reduction efforts will likely cushion its earnings and support its share price in the long term.
Aritzia
Aritzia (TSX:ATZ) is another solid growth stock to buy now. It is worth noting that this luxury clothing company’s top and bottom lines have grown rapidly. For instance, Aritzia’s net revenue sports a five-year CAGR (compound annual growth rate) of 19%, while its e-commerce revenue increased at a CAGR of 37%. At the same time, its adjusted net income grew at a CAGR of 13%. Thanks to its impressive growth, Aritzia stock jumped over 126% during the same period.
While macro uncertainty is taking a toll on consumer discretionary spending, the company’s focus on enhancing its customer experience, introducing new styles, expanding omnichannel offerings, opening new boutiques, and broadening its product range will likely accelerate its growth.
goeasy’s revenue and earnings could grow at a solid double-digit rate in the medium term. Thanks to these positives, Aritzia stock could outperform the broader market and deliver above-average returns.
goeasy
Investors seeking top Canadian growth stocks could consider goeasy (TSX:GSY). It provides loans to subprime borrowers and is growing rapidly. Moreover, its low valuation adds to the positives. This financial services company has delivered stellar financial results in the past, which drove its price higher and made investors rich.
It is worth noting that goeasy’s earnings per share grew at a CAGR of 32.2% in the past five years. Thanks to its impressive earnings, goeasy stock has grown at a CAGR of about 34% in the last five years, delivering a return of about 334%. Moreover, it has increased its dividend for 10 consecutive years.
goeasy’s solid credit underwriting capabilities and wide product range enable it to capitalize on the large subprime lending market. Looking ahead, higher loan originations will drive its top line. Moreover, leverage from higher revenue, stable credit performance, and improved efficiency will boost goeasy’s EPS growth.
Shares of this financial services company are trading at a forward price-to-earnings multiple of 11.2, which appears low given its double-digit EPS growth and a decent yield of 2.3%.
