Many growth investors talk about Shopify (TSX: SHOP) and recall its phenomenal rise to superstardom in 2020. Today, the same people wonder which company could follow the same growth trajectory and be worth more than the tech stock by 2030.
Given their strong momentum, Celestica (TSX: CLS) and Propel Holdings (TSX: PRL) are the top candidates to rise above Shopify’s share price ($110.19), not market cap ($142.2 billion), in the near term. Both growth stocks have delivered astronomical returns in three years. Their prices could soar higher as the respective businesses continue to thrive.
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Sustained growth
Shopify lost steam post-pandemic and sustained growth became a major concern among investors. Celestica isn’t an e-commerce company but is well-positioned for long-term, sustainable growth because of artificial intelligence (AI). The $8.7 billion company benefits immensely from the generative AI boom.
At $74.01 per share, CLS is up 90.7% year-to-date. The trailing one-year price return is 105.2%, while the overall return in three years is 555.5%. If NVIDIA (NASDAQ: NVDA) is America’s AI king, Celestica is the Canadian counterpart. NVDA’s three-year return is 518.1%.
Celestica enjoys robust demand for AI and machine learning (ML) compute and networking products from hyperscale customers. The business grew due to infrastructure investments, technology know-how, and industry-wide experience over almost 30 years. Moreover, the diverse and expanding product portfolio integral to AI applications drives growth momentum.
Goldman Sachs (NYSE: GS) believes the AI hype differs from the dot.com bubble years ago. The investment firm lists Celestica as one of the fast-rising AI superstars due to its Hardware Platform Solutions (storage, compute, and networking).
In the first half of 2024, revenue and net earnings rose 21.8% and 151% year-over-year to US$4.6 billion and US$201.3 million, respectively. Also, during the period, cash from operating activities increased 25.5% compared to $254.2 million from a year ago. Rob Mionis, CEO of Celestica, notes the favourable demand dynamics.
According to management, investments are required to support Celestica’s long-term objectives. The company raised its full-year 2024 outlook and projected 19% year-over-year revenue growth to US$9.5 billion. Industry experts estimate the global AI data infrastructure market to grow at a compound annual growth rate (CAGR) of 18%.
Global expansion
Propel Holdings is now on most growth investors’ radars. At $30.50 per share, current investors enjoy a 139.4% year-to-date gain plus a 1.8% dividend. If you had invested $10,000 on October 20, 2021, your money would be worth $33,152.17 today (+231.5%).
The $1.1 billion financial technology company extends credit to underserved or denied consumers of traditional financial institutions. Its Lending-as-a-Service product line boasts an AI-powered platform. In the first half of 2024, net income climbed 84.8% year-over-year to US$24.2 million.
Its CEO, Clive Kinross, said Propel is expanding globally. The fintech announced the acquisition of QuidMarket, a UK-based digital direct lending platform with the same target market as Propel for US$71 million. “When we went public three years ago, we set a goal to grow globally,” Kinross added.
Superior returns
Shopify will remain a top e-commerce company, although high-growth stocks Celestica and Propel Holdings will deliver far superior returns in the coming years.
