Investing in beaten-down growth stocks is a great strategy for long-term investors. These companies, which can trade at premium valuations during bull markets but can often get dislocated from their fundamentals, can be said picks in a bear market environment.
After their recent downturns, I think these two TSX growth stocks are worth considering, particularly for investors who are bullish on the long-term futures these companies offer investors.
Boyd Group
Boyd Group (TSX:BYD) is one of Canada’s largest automotive companies, operating under the name Boyd Autobody & Glass and Assured Automotive. The company also operates under the name Gerber Collision & Glass in the United States, having spent years consolidating what has been a rather fragmented collision repair sector over time.
This growth-via-acquisition model has led to strong long-term growth and solid fundamentals. In the company’s second-quarter 2024 report, Boyd noted the company brought in revenue of US$779 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of US$89.6 million. In addition, the company reported net earnings of US$10.8 million for the same period. The standardized EBITDA for the period came in at US$88.07 million, and the company’s adjusted net earnings per share were US$0.56. Furthermore, Boyd’s adjusted net earnings for the period were US$11.93 million on same-store sales of US$779 million.
When it comes to business strategy, Boyd Group has cost containment and efficiency improvements as two of the company’s largest focal points. The company continues to focus on maximizing its opportunities by optimizing returns from existing operations through same-store sales growth. During the past few years, Boyd Group has focused resources and energy on increasing its share of the auto glass repair and replacement business. So long as this long-term strategy remains in place, this is a top growth stock to consider on this recent dip.
Shopify
Shopify (TSX:SHOP) is one of the largest e-commerce platform providers in the world, and it has seen its growth re-accelerate in this post-pandemic world. The company offers a platform to medium- and small-scale businesses to sell their products and services. As a brand, Shopify operates in more than 175 countries to provide customized, reliable, secure, and speedy services to online customers through its platform.
The company has an extensive plan to grow its presence globally and is planning to increase its revenue by a low to mid-20s percentage rate year-over-year basis. Furthermore, Shopify’s GAAP (generally accepted accounting principles) operating expense dollars are to be up at a low- to mid-single-digit percentage rate compared to the first quarter of 2024.
In the second financial quarter of 2024, Shopify’s gross merchandise value increased by 22% to US$67.2 billion and the revenue by 21% to US$2.0 billion. Shopify also reported free cash flow of US$333 million and monthly recurring revenue of US$169 million, an increase of 25% over the same quarter the year prior. Moreover, the company’s gross profit dollars grew 25% to US$1 billion and gross for the second quarter was 51.1%. Hence, the e-commerce trend is here to stay, meaning long-term investors may want to stick around for the growth that could accelerate higher from here.
