It is difficult to time the market. However, you can buy stocks that show promise of growth when the headwinds subside and business returns to normalcy. You could consider seasonal stocks without hesitation, as they tend to repeat their trends. Or you could consider cyclical stocks hit by wrong decisions and a weak business environment but have promising growth because of a strong product or business model.
Two monster growth stocks to buy right now with $3,000
Here are two monster growth stocks that could give you more than 30% growth in the coming 12 months.
Shopify stock
Shopify (TSX:SHOP) stock is trading around $83 — 10.5 times its sales per share. The e-commerce company is trading at a high valuation but is also growing at a higher rate. If you look at past sales, its valuation might look high. But if you look at the stock’s coming five-year sales, it is an attractive value. Here’s why.
Shopify has been growing its revenue by 20-25% annually. Its best quarter is the December quarter, where it earns 30% of its annual sales. The holiday season brings in more traffic and transaction volumes. Its fourth-quarter revenue has surged at an average yearly rate of 60% in the previous nine years. The growth rate slowed to 25% during the 2022 and 2023 holiday seasons as consumers struggled with high inflation and interest expense.
| Period | Shopify’s YoY Revenue Growth Rate |
| Q4 2015 | 99% |
| Q4 2016 | 86% |
| Q4 2017 | 71% |
| Q4 2018 | 54% |
| Q4 2019 | 47% |
| Q4 2020 | 94% |
| Q4 2021 | 41% |
| Q4 2022 | 26% |
| Q4 2023 | 24% |
The Bank of Canada’s recent and upcoming interest rate cuts could boost consumer spending and accelerate Shopify’s fourth-quarter revenue growth. Faster sales growth could make the $83 stock price look cheap five years later.
The company could see a 30-60% seasonal rally between August 2023 and February 2024. A $1,500 investment now can buy you 18 shares of Shopify. I expect the stock price to surge as much as $110-$130 by February 2024, growing your investment to $1,980-$2,340.
Dye & Durham
Dye & Durham (TSX:DND) stock is trading below its July 2020 initial public offering price, negating all the revenue growth it achieved in these four years. The company is starting with a clean slate, leaving behind its expensive mistakes that pulled the stock price down 40% from its January 2023 recovery.
Dye & Durham made some costly mistakes by attempting the acquisition of TM Group and Link, both of which failed to secure regulatory approval. As a result, it had to impair the intangible acquired assets, bear the heavy cost of funding the acquisition, and other transaction and acquisition-related costs. All these expenses pushed the company into losses.
The second half of 2024 could see organic growth and streamlined expenses as the company focuses on reducing debt. A rebound in real estate transactions could drive its revenue as it earns 43% of its revenue from this sector.
Dye & Durham’s stock price surged more than 100% between November 2023 and March 2024 on hopes of interest rate cuts and gradual recovery in some real estate markets. It could repeat a similar recovery once real estate transactions trigger. A $1,500 investment now can buy you 111 shares of Dye & Durham at $13.5. I expect the stock price to surge as much as $22-$28, growing your investment to $2,442-$3,108.
Final thoughts
While Shopify’s seasonality can be timed, timing DND’s cyclical rally is difficult. However, the two stocks have promising growth potential in the coming 12 months. You can buy the dip and book your seat to convert $3,000 into $4,500 at the lower range and $5,400 at the upper range.
