The Toronto Stock Exchange (TSX) is home to a diverse range of companies, with a relatively small amount of attention paid to the world-class growth stocks held on this exchange.
Of course, the global marketplace is one that has encouraged capital to flow to other markets, particularly in recent years. But I still think certain TSX stocks could be monsters over the next three years, relative to the competition.
Here are three I’ve got my eye on right now.
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Shopify
Shopify (TSX:SHOP) has redefined the global retail landscape by empowering businesses of all sizes to build and scale their online presence. As e-commerce grows rapidly, Shopify is well-positioned to maintain its leadership in this dynamic market.
E-commerce sales worldwide are projected to grow at a compound annual growth rate (CAGR) of over 18% through 2030. Indeed, Shopify’s platform is integral to this growth, serving millions of merchants globally. In addition, Shopify has consistently introduced features to enhance its platform, such as Shopify Markets for cross-border selling and AI-powered tools like Shopify Magic. These advancements attract new merchants and deepen engagement with existing ones.
With its subscription-based model and growing revenue from merchant solutions (including Shopify Payments and fulfillment services), Shopify has built a stable and scalable business. Its revenue streams are well-diversified, offering resilience in the face of economic fluctuations. Despite its premium valuation, Shopify’s long-term growth trajectory, backed by global e-commerce expansion and technological innovation, makes it a stock to hold for the next three years.
Constellation Software
Constellation Software (TSX:CSU) has earned its reputation as one of Canada’s most reliable and consistent performers. The company’s strategy of acquiring and managing vertical market software (VMS) businesses has delivered outstanding shareholder returns for years.
Constellation’s core growth driver in recent years has been its ability to identify, acquire, and integrate small- to medium-sized software companies. This approach has allowed Constellation to expand its revenue and operating margins. Furthermore, most of the company’s businesses operate with a recurring revenue model, providing cash flow stability and predictability. Investors like these businesses for their reliable long-term growth trajectories, and that’s understandable.
Constellation operates in over 100 countries across diverse industries, from healthcare to utilities. This diversification reduces risk and enhances growth opportunities. With a stellar track record of execution, strong leadership, and a business model that thrives on scalability, Constellation Software is a quintessential buy-and-hold stock. It is a top choice for investors seeking consistent compounding over the next three years.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is a leader in the convenience store and fuel retailing industries, operating over 14,000 stores across North America, Europe, and Asia. Its disciplined growth strategy and operational efficiency make it a must-have for long-term investors.
Couche-Tard’s strategic acquisitions and organic growth initiatives have expanded its footprint significantly. The company seeks opportunities in untapped markets, particularly in Asia and Europe. Notably, convenience retail is resilient, offering consistent demand regardless of economic conditions. Couche-Tard’s investments in technology, including self-checkout systems and digital loyalty programs, keep it ahead of competitors.
As the world transitions to cleaner energy, Couche-Tard is investing in EV charging infrastructure at its locations, ensuring its relevance in the evolving energy landscape. With its strong balance sheet, reliable cash flow generation, and focus on innovation, Alimentation Couche-Tard is well-positioned to deliver steady returns over the next three years.
