The recent rotation out of growth stocks has been pretty vicious. With a 90% effective vaccine revealed by Pfizer last week, the floodgates were opened to scoop up many of the battered COVID-19 recovery plays. And the money to invest in such beaten-up names had to come from somewhere. Last week, it came from some of the biggest winners of the first three quarters.
Top-tier pandemic winners got ridiculously expensive this year, but now that they’ve cooled off a bit, now is as good a time as any to punch your ticket into some hot names before they have a chance to bounce back after being sold off through no fault of their own.
Without further ado, consider Docebo (TSX:DCBO) and Nuvei (TSX:NVEI), two Canadian hyper-growth stocks that sold off viciously in recent weeks.
Docebo
Docebo is a pioneer in the Learning Management System (LMS) market, a niche space that few had heard of before the coronavirus struck earlier this year. The company was growing at a decent rate before the pandemic, with a decent client roster of well-established firms. During the pandemic, as firms rushed to digitize, Docebo’s platform has been a hot commodity.
The company has won over the likes of the giants, including the likes of Amazon.com Web Services, a big deal that investors should not take lightly.
While the pandemic’s end is in sight, with the Pfizer vaccine, I don’t think Docebo’s client win streak is about to end alongside this crisis. The company is making a name for itself, and I suspect the best growth days still lie ahead of the firm that recently won the business of one of the biggest disruptors of our time.
Docebo stock pulled back 15% but was quick to recover some ground. Should Docebo fall into bear market territory again, I’d get ready to back up the truck on the early-stage growth story is well worth an expensive multiple.
Nuvei
Nuvei (TSX:NVEI) had a stellar Canadian Initial Public Offering (IPO) back in September. It was a record-breaking tech issue, but versus the likes of some U.S.-based IPOs, Nuvei could have a heck of a lot more room to run, as it looks to make its mark on the payments processing scene. Since Nuvei’s big IPO day, the growth stock has been an absolute roller-coaster ride, swinging double-digit percentage points in both directions.
CEO Phillip Fayer is an incredible leader, and he’s worth paying up to invest alongside. With a world of M&A growth opportunities for one of the payments play, I think the stock is a must-buy on any form of weakness. Today, shares trade just shy of 18.6 times sales, which is relatively cheap for a firm that’s capable of growing its revenues at a Shopify-like double-digit rate.
While I’m not a big fan of some of the recent IPOs, I’d be willing to make an exception for Nuvei should shares continue to pullback alongside other tech stocks in another rotation into value. The growth stock is worth a premium, and I’m a huge fan of the managers running the show.
