Today’s best-performing growth stocks may not be tomorrow’s. In this current climate, I’m wary of making any sort of near-term price predictions. That’s partly because sticking to longer-term views on specific stocks tends to have a higher probability of playing out, because that’s the way markets work.
The thing is, there is some cyclicality to investing as well. December tends to be a good month for stocks, with the so-called “Santa Claus” rally driven by portfolio allocation shifts while tax strategies can lead to big upside for investors who get in at the right time. I’m not going to dismiss this view and wanted to aim this piece at investors looking for top growth stocks to buy ahead of what could be a nice rally in the coming month.
For those in such a boat, here are three ideas to consider as we turn the page to the last month of the fiscal year.
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Constellation Software
In terms of Canadian tech stocks that have gotten hammered of late, I’d certainly put Constellation Software (TSX: CSU) into this bucket.
Shares of the Canadian software giant have fallen off a cliff since June, when they peaked above the $5,000 level. Now trading around $3,000 per share, one has to wonder whether it’s going to be more of the same heading into the end of this year.
I think Constellation Software could benefit from a number of trends into the year-end. One would be additional rate cuts from the Federal Reserve and Bank of Canada, improving the valuation outlook for the company’s portfolio of software businesses. Another would be an improving outlook for the real economy, driven by expectations that productivity growth may resume or re-accelerate.
In either case, structural buying could simply be enough to take this stock off the ropes. For those who think of Constellation Software as a top long-term holding to buy, this entry point certainly looks like one of the most juicy I’ve seen in a long time.
Kinaxis
For investors looking to capture some upside via the ongoing surge in AI stocks, Kinaxis (TSX: KXS) is one Canadian company that could have the most upside of its peers.
The company’s core RapidResponse software platform, aimed at improving supply chain efficiency for a range of companies from large to small, has seen strong growth on its own in recent quarters. But with various AI integrations into its core offerings, investors hoping for growth to accelerate further from here have been hanging their hats on this stock to outperform.
Unfortunately, Kinaxis really hasn’t provided a meaningful breakout in some time. Trading near the mid-point of its medium-term range, this is a stock that can go in either direction.
I’m bullish on the company’s long-term prospects, but I’m unsure as to how the market will view this stock in the months to come. That said, for those looking to pick up shares of a quality company at a relative discount, this is a top option I think could have big upside in December if conditions improve.
Shopify
No list of top Canadian growth stocks to buy right now can be complete without discussing Shopify (TSX: SHOP), in my view.
This e-commerce platform provider has been on a tear since it bottomed out in 2022. Indeed, since that bottom, Shopify is up more than fourfold, showing just how prominent this player has become in the market at large.
I wouldn’t be surprised to see Shopify become the first Canadian company to breach the $1 trillion threshold. And while this stock is trading at roughly one-fifth that market capitalization right now, I’m also well aware that anything is possible over the long term.
Given Shopify’s robust fundamentals and growth outlook, in combination with what could be strong buying pressure from investors looking to play a year-end rally, this is one stock I think is worth buying on its recent dip as well.
