Purchasing stocks may be intimidating, particularly when there are dozens of options to choose from. For savvy investors, there are always opportunities. However, finding no-brainer stocks to invest in at any point in the market cycle is a difficult task. For investors seeking growth, that’s perhaps more of a difficult task, given where valuations have gone in recent years.
With that said, here are two top Canadian growth stocks I think long-term investors may want to consider as great ways to invest $1,000 in a TFSA for the long haul. Let’s dive in!
Shopify
Shopify (TSX:SHOP) provides companies with an all-in-one platform to launch, manage, and expand their online presence. The company has grown to become a major player in the e-commerce space and is certainly among the top Canadian growth stocks on most investors’ lists. The firm continues to develop in ways that keep it ahead of the curve, and it has played a vital role in helping small and medium-sized enterprises (SMEs) to compete in the digital marketplace.
Shopify Inc.’s gross merchandise value climbed by 22% to US$67.2 billion in the second quarter of 2024. Notably, revenue also increased by 21% to US$2 billion. This growth has come as a result of a 25% rise in monthly recurring revenue of US$169 million and free cash flow of US$333 million. Additionally, the company’s second-quarter revenue of 51.1% and growth in gross profit dollars of 25% to US$1 billion represented strength, and showcase Shopify’s ability to grow profitably. At this point in the cycle, that’s an increasingly important element to consider.
For those looking to benefit from strong secular growth trends in the e-commerce space, Shopify remains a top pick. The company’s current stock price appears to be a relatively decent entry point, considering the multiples SHOP stock has traded at in the past. With strong revenue growth, growing service offerings, and strategic initiatives targeted at larger organizations, Shopify’s strong balance sheet with $5 billion in cash reserves and a solid growth outlook certainly looks enticing right now.
Constellation Software
Canada’s dominant player in the software sector, Constellation Software (TSX:CSU), is well-known for its adept handling and acquisition of vertical market software (VMS) companies. The company’s approach is on buying small to mid-sized software companies and scaling them up – a methodology that has shown to be incredibly successful over time.
Constellation Software is trading at a multiple that may appear pricey at first. But its steady success and strong financial standing make it a worthwhile investment. The corporation reported sales of US$2.5 billion in Q2 2024, a 19% rise over the same period the previous year. A 15% increase in net income from the prior year, to US$280 million, accompanied this expansion.
The strategy employed by Constellation Software, which involves acquiring and growing specialized software businesses, has often produced outstanding outcomes. The management skill is evident in the company’s ability to successfully integrate such acquisitions and provide sizable profits. For those who can afford it, the stock is a great investment despite its high share price due to its past performance and potential for future development.
