Investing in growth stocks can be challenging as a stock market investor, especially as a beginner. Growth stocks offer the promise of substantial potential to deliver excellent returns through capital gains, but they have the drawback of being less secure than other, more boring stocks. However, not all growth stocks are the same. Some simply stand out among the rest, offering high but solid growth potential.
Learning how to choose growth stocks is the key to making more successful bets in the stock market. This is why we will look into one well-known and one lesser-known growth stock to watch closely if you want to invest in growth stocks for your self-directed portfolio.
Dollarama
Dollarama (TSX: DOL) is quickly cementing itself as one of the best growth stocks on the TSX. The $38.46 billion market capitalization company owns and operates Canada’s largest retail store chain for items that cost $5 or less. While most of its stores are located in Ontario, Dollarama has over 1,400 locations throughout Canada.
The company’s business model as a discount retailer has made it a well-known brand that can generate more revenue and open more stores regardless of whether the economy improves or gets worse. With surging inflation weighing on the economy and higher interest rates deteriorating consumer buying power, Dollarama stock has found more tailwinds over the last few years.
Analysts anticipate Dollarama to see a 13% growth in normalized earnings per share (EPS) as its margins continue improving. As of this writing, Dollarama stock trades for $136.48 per share, hovering around its latest all-time high of $137.72 per share.
Capstone Copper
Capstone Copper (TSX: CS) is not a well-known name. For some, that might not make it too attractive an investment to consider, but it might be the perfect hidden gem for others. Finding a lesser-known growth stock with immense potential is rare but not impossible today. Capstone Copper is a $7.07 billion market capitalization company that mines, explores, and develops mineral properties in the Americas. It operates mines in Canada, the U.S., and Mexico and has development projects in Canada and Chile.
Focusing primarily on copper, it also produces gold, silver, molybdenum, lead, and zinc. The company recently announced the successful production of its first saleable copper concentrate in its ongoing project in Chile. This marks a significant stage that will result in a substantial boost to its copper output and reduce operational costs, improving its profitability.
The stock has immense potential, and its performance over the last year shows promise. As of this writing, Capstone Copper stock trades for $9.30 per share, up by almost 53% last year and just below its recent $11.51 per share all-time high.
Foolish takeaway
Regardless of how much potential growth stocks show, it is important to understand that it is inherently a risky strategy. Ideally, you should focus first on adding high-quality but boring stocks to your portfolio. With secure investments to offset risks, you can consider adding riskier investments with the potential for more exciting returns.
All things considered, Dollarama stock and Capstone stock seem like good investments to consider adding to a growth-seeking portfolio. Where Dollarama stock might show more promise in the near term, Capstone stock looks well-positioned to deliver outsized gains in the longer run. If you want to hedge your bets on growth stocks, these two TSX growth stocks can be good investments to consider.
