Trying to find 10 times opportunities in any market is generally a fool’s errand. Certainly, some companies have shown the ability to provide such returns in the past. My two picks on this list have that track record, backing up the view that over the long term such gains could be possible once again.
But the reality is that not all growth stocks are created equal. In fact, many companies that have seen 10 times growth in the past aren’t likely to see a repeat of such performance, due to the hype or narrative-driven rallies that have been extinguished in the minds of investors.
These two companies are ones I think could take a $10,000 investment potentially into the six-figure realm over the course of the next 15 years. That may be a laughable target for many, but given how incredibly high the market has proven to value the fastest-growing and most productive companies out there, I wouldn’t put it past these three companies to do so again.
Top growth stocks: Shopify
Canadian multinational e-commerce giant Shopify (TSX:SHOP) has seen absolutely torrid growth since its IPO. This is a stock that went public at a split-adjusted price of US$2.50 per share. Today, Shopify stock trades at more than US$83 per share, meaning investors in this IPO have seen more than 3,300% growth over this timeframe alone.
Now, given Shopify’s size, there are certainly plenty of investors out there who rightly don’t expect a repeat of such a performance moving forward. That’s fair. Indeed, a 10 times return from here would value Shopify at roughly US$1 trillion. But as we’re increasingly seeing, a $1 trillion valuation isn’t what it used to be, so the question is whether investors think such an outcome is possible for this e-commerce giant.
In my view, the global growth trends in the e-commerce space are only likely to accelerate, forcing businesses of all sizes to move online with their retail selling behaviour. This should positively impact Shopify over the long term, and it is key to the investing thesis behind this name.
Shopify has continued to post strong growth, but I think growth will need to accelerate moving forward in order for such a target to be hit. That said, I think anything is possible with this Canadian growth gem, and I wouldn’t put it past the company at all.
Boyd Group
Boyd Group (TSX:BYD) is another top Canadian growth stock I’ve been pounding the table on for years. This call has proven to be correct, with BYD stock surging more than 1,000% over the past 11 years or so. These returns are even more impressive the further you zoom out (I’d encourage investors to do so on the chart below) to see just how excellent of a compounder Boyd Group has been over time.
Again, the question is whether this momentum can continue over the long term. That’s a valid question, but in this case, I do think Boyd has the potential and ability to continue to see strong long-term growth driven by its core business model, which is very scalable.
Operating as one of the top non-franchised auto collision repair companies in North America, Boyd essentially buys out small auto collision repair shops and integrates them under its North American banners. With nearly 1,000 locations across 5 Canadian provinces and 33 U.S. states, Boyd has become ubiquitous in many communities, and most readers have likely used some of the company’s services in the past.
Additionally, as inflation has eaten into households’ earning capabilities, the average age of a car on the road has increased dramatically in recent years. Folks are keeping their used cars for longer, and increasingly fixing them up. That’s obviously a strong secular tailwind which should provide organic growth for this M&A-fueled behemoth.
If these trends continue over the long term, I’m very bullish on the potential for another 1,000% return over the next 15 years.
