In terms of the leading Canadian growth stocks out there for investors to consider, Shopify (TSX:SHOP) has to be top of mind for most in the market. Indeed, the company’s stock chart below highlights just how powerful a growth name this company has been over the course of the past decade (I’d encourage investors to zoom out on the chart), though the past few years have been choppy to say the least.
That said, I’ve got another top Canadian growth stock I think could be even better for more conservative investors out there.
Let’s dive into why Constellation Software (TSX:CSU) is one of my top picks right now, and where I think this Canadian software stock is headed from here.
Source: Getty Images
Scalability and durability matter
Both Shopify and Constellation Software are companies I’d argue have plenty of growth potential as leading TSX tech stocks. And it’s clear from looking at the charts above that both companies have solid momentum right now.
That said, I think Constellation Software’s longer-term chart is more of what most conventional long-term investors want to see. Shopify’s volatile earnings have led to sharp share price swings, which may not necessarily be for every investor. Indeed, those who want to see the kind of slow-and-steady long-term capital appreciation both stocks have provided over the past decade may want to do so in a smoother and lower-beta sort of fashion.
For such investors, Constellation Software appears to be the better pick from this perspective. That said, I think the more near- to medium-term future may be more bullish for a company like Shopify. Thus, time horizon matters as well.
Catalysts galore
Both companies are excellent picks from a catalyst standpoint, with Shopify benefiting from robust and consistent growth in the e-commerce sector, and Constellation Software benefiting from a robust market for small- and medium-sized software companies to be acquired.
One company is a growth-by-acquisition play, while the other is a more conventional tech platform play. Both companies benefit from the rise of AI, with Shopify introducing a number of AI enhancements to its core platform (raising subscription revenue) and Constellation Software having a number of top AI-related startups to bring into the fold.
That said, I think Constellation’s long-term outlook is probably better than Shopify’s, given the latter company’s risk profile if we do see a marked downturn in consumer spending. For that reason, I think Constellation is the way I’d play Canadian tech right now, for those looking to add some exposure to this market.
