There are plenty of reasons to be worried about a bubble in a number of asset classes right now. Homes are more unaffordable than we’ve seen in decades (by some metrics, the most overvalued in history, but hey), the price of gold and other key commodities continue to surge, and equities are trading at their highest valuations in quite some time as well.
That said, I do think there are high-quality growth stocks investors can buy (at reasonable valuations) that can provide the kind of stable and consistent growth I think most of us are after.
These three companies happen to be based in Canada and are among my top global picks in this regard.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) has long been one of my top growth stock picks in a rather boring sector (what I like).
Couche-Tard’s main business is acquiring small and mid-sized chains of gas stations and convenience stores, typically converting these chains into one of the company’s portfolio of banners.
As the chart above shows, this model has been successful over time, though investors in the past two years have sought out other top growth stocks in the tech sector, due to slowing growth and expectations that larger deals will be more difficult to come by. I think that’s probably the case. But at a price-earnings ratio of 18 (one of its lowest multiples in years) and plenty of upside ahead, this could be the boring growth stock you’re looking for.
Restaurant Brands
Another Canadian growth stock that hasn’t been this cheap in years is Restaurant Brands (TSX:QSR).
Trading at a price-earnings multiple of 24 times, one might initially think this stock is expensive. That said, 5 to 10 years ago, this stock was trading in the 30 to 40 times multiples. Similar to Couche-Tard, I suppose there is some element of slowing growth that plays into this lower multiple.
That said, with Restaurant Brands’ global growth strategy, its dividend yield above 3%, and plenty of long-term growth upside, I think this is a top pick worth considering in this increasingly risk-off market.
Suncor
Perhaps my favourite undervalued energy stock Canada has to offer, I don’t know I would necessarily call Suncor (TSX:SU) a true growth stock.
That’s not to say there’s no growth to be had with this company. Far from it.
In recent years, with oil prices recovering nicely from pandemic-era levels and retaining these higher levels for some time, lower-cost producers like Suncor have benefited.
Additionally, the price discount Canadian producers like Suncor receive has narrowed in recent years, suggesting this is an area of the market more global investors will look at (and put capital into).
For those who believe these recent catalysts can be sustained, I think Suncor is an intriguing pick as a top Canadian growth stock to buy right now.
