In terms of high-growth Canadian stocks that investors may want to consider, there are plenty of factors to consider right now.
Yes, there are plenty of secular and structural growth catalysts that are playing out right before our eyes. Whether we’re talking about artificial intelligence, machine learning, quantum computing, autonomous driving, cloud computing, or a range of other growth sectors, those investing in high-growth companies have outperformed those looking for value.
I’m of the view that at some point, this relative outperformance will likely wane. But there are a few Canadian growth stocks I think can buck the trend. Here are two such companies investors may want to consider.
Kinaxis
Few Canadian stocks have the kind of AI exposure Kinaxis (TSX:KXS) provides right now.
The company’s core supply chain management software suite has seen high growth in the past as a standalone business. But with recent AI integrations, enterprise orders have surged. In fact, over the past quarter, Kinaxis has seen impressive 17% year-over-year growth in its SaaS (software as a service) recurring revenue. That’s the kind of high-margin revenue (which is sticky) investors want to see.
With solid revenue and profitability growth targets over the course of the coming year, there’s a reason why this stock is trading at the levels it is. That said, the recent AI slowdown has led to a stock price dip. In my view, this is a dip worth buying.
Shopify
Shopify (TSX:SHOP) continues to be my top growth stock pick for investors.
The e-commerce platform provider has seen strong growth (even stronger than Kinaxis of late), with its revenue and gross merchandise volume both increasing by 32% on a year-over-year basis this past quarter. This growth was much stronger than analysts and many market participants clearly thought, and has been a key driver of the stock’s move toward new all-time highs.
For the past couple of years, I’ve argued that new all-time highs could be in order. I’d like to see Shopify breach the $250 level, where I’d argue the company should be valued right now.
If Shopify can continue to produce results that shatter expectations, this is a stock that could easily breach the $300 level over the course of the next year. That’s my target level, and I’ll reassess Shopify should the company breach that threshold.
