The market for Canadian growth stocks is one many investors may not be paying close attention to. There are a range of reasons for this, from the size of this market to the limited number of tech companies that tend to come out of Canada.
However, that’s not to say that a hotbed of innovation is not waiting for investors to pounce. For those willing to look outside of the U.S. for growth (and a newfound trend of global stocks picking up steam), there are a few top Canadian growth stocks I think are worth paying attention to right now.
Here are two of my top picks I think could be poised to soar in 2025 and beyond.
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Shopify
E-commerce platform provider Shopify (TSX: SHOP) remains roughly 50% below its pandemic highs. However, this is a stock that had some strong momentum heading into this year, before shares abruptly fell off a cliff in recent weeks as broader economic concerns appear to have begun to hit the e-commerce sector.
I think these concerns are worth exploring from a number of angles. On the one hand, investors have reason to be concerned that online retail sales volumes could slow in a world where higher tariffs could mean less international trade (a big component of Shopify’s overall model). On the other hand, domestic businesses looking to fill the hole previously occupied by such firms could offset some (or all) of this slowdown.
That said, consumer spending worries are clearly being priced into various consumer-facing stocks. And given where Shopify is positioned, this concern is notable.
Worth noting is, over the long term, there’s reason to believe that more and more retail spending will take place on one’s computer or smartphone. For those who still believe these underlying trends will remain robust, buying SHOP stock when it’s beaten down like this could prove to be a smart move.
That’s the position I’m taking right now, and I think Shopify could be poised for a nice reversion rally when the clouds clear. I have no idea when that will be, but this is a stock that’s a long-term position in my books.
Constellation Software
Another top tech giant in the Canadian market, Constellation Software (TSX: CSU), has a much prettier long-term chart to look at.
As investors will notice, the company’s performance over the past five years has been very orderly. The sort of up-and-to-the-right move long-term investors want to see is very visible with this company. That move is due to a number of factors which have contributed to very consistent earnings growth over the long term.
Constellation’s business model is based on a rather simplistic view that the software sector is one that can (and likely will) be consolidated over time. With a smaller number of companies owning a larger percentage of the overall ecosystem in the world of software and SaaS businesses, Constellation Software could be one of the true Canadian stalwarts in a sector that’s currently dominated by U.S. companies.
We’ll have to see. But for now, I’m not the only bull on Constellation Software that thinks the same way. Despite a rather elevated valuation multiple, this is still a stock that’s attracting strong inflows. And until the company’s business model shows anything resembling cracks, I think this trend is likely to continue over time.
