1 Top Canadian Growth Stock to Buy Now With $500

Docebo is a quality growth stock trading on the TSX.

| More on:

When it comes to creating long-term wealth, investing in quality growth stocks is a solid option. These stocks have the potential to generate exponential returns over time and may even accelerate your retirement plans.

For example, TSX stocks such as Shopify and WELL Health have returned 5,600% and 8,700%, respectively since their Initial Public Offerings (IPOs). Growth stocks command a premium valuation, making them vulnerable in a market sell-off. Alternatively, they also crush market returns in a bull run.

Here, we take a look at another Canadian growth stock on the TSX that you can look to buy right now.

Docebo increases sales by 61% in Q1

One of the hottest growth stocks on the TSX is Docebo (TSX:DCBO)(NYSE:DCBO) which provides a cloud-based learning management system to train internal and external workforces, partners, and customers in North America and other international markets.

The company’s platforms enable customers to centralize learning materials from peer enterprises into a single learning management system which in turn helps to expedite the learning process and increase productivity.

Docebo initially launched as an open-source model and transitioned toward a SaaS (software-as-a-service) platform in 2012. It was one of the first companies to introduce artificial intelligence into the e-learning market providing Docebo with a durable competitive advantage.

Docebo managed to increase sales from US$17 million in 2017 to US$63 million in 2020. This allowed the e-learning giant to narrow its operating loss from US$8 million in 2018 to less than US$5.5 million last year.

Docebo ended the March quarter with $217 million in cash, providing it with enough runway to improve profit margins going forward.

In the first quarter of 2021, Docebo sales rose by 61% year over year to US$21.7 million. Comparatively, subscription sales rose 62% to US$19.8 million, accounting for 91% of total revenue in Q1. Docebo’s annual recurring revenue rose 60% year over year to US$83.4 million.

Its EBITDA loss stood at US$2.5 million, or 11% of total sales compared to US$2.4 million or 18% of revenue in the year-ago period. Its negative free cash flow also improved from US$2.7 million to US$2.4 million in this period.

What next for investors?

Docebo ended the March quarter with a customer base of 2,333. Its average contract value per active customer also rose from US$28,454 to US$35,739. The company signed a new customer agreement with Lightspeed POS to launch a multi-audience learning use case including the latter’s employees and customers.

Analysts tracking DCBO stock expects sales to rise by 53.8% year over year to US$96.8 million in 2021 and by 36% to US$131.34 million in 2022. Docebo is also forecast to narrow its loss from US$0.26 per share in 2020 to US$0.11 per share in 2022.

Docebo is valued at a market cap of $1.98 billion, which suggests it’s trading at a forward price to 2022 sales multiple of 18.3. That’s steep for a company still posting an adjusted loss.

However, the company is forecast to post a net profit of US$2 million in 2023 and is a good stock to buy in 2021 and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Docebo Inc. and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

More on Tech Stocks

Nurse talks with a teenager about medication
Tech Stocks

Shares of WELL Health Just Zoomed. Is It a Buy?

Given its improving financials and healthy growth prospects, WELL Health could deliver superior returns over the next three years.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

3 Artificial Intelligence (AI) Stocks to Buy With $1,000 and Hold for Decades

Three TSX stocks are excellent choices for Canadians looking for exposure to significant AI players.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Dividend Stocks

Where Will OpenText Stock Be in 1 Year?

OpenText (TSX:OTEX) stock's uncertain future: AI potential versus stagnant growth over the next 12 months

Read more »

Abstract Human Skull representing AI
Tech Stocks

Is Lightspeed Commerce a Buy After Q2 Earnings?

Given its healthy growth prospects, improving profitability, and reasonable valuation, I expect Lightspeed's uptrend to continue.

Read more »

GettyImages-three smiling investors_using tablet
Tech Stocks

2 Reasons to Buy Nvidia Before Nov. 20 and 1 Reason to Wait

This top AI stock has soared nearly 200% this year.

Read more »

A man smiles while playing a video game.
Tech Stocks

A Few Years From Now, You’ll Wish You Bought This Undervalued Stock

A dividend-paying but undervalued tech stock is a buying opportunity for both income and growth investors.

Read more »

An investor uses a tablet
Tech Stocks

3 Reasons Shopify Stock Could Hit its All-Time High Again in 2025

Down over 30% from all-time highs, Shopify is a TSX tech stock that trades at a compelling multiple in November…

Read more »

GettyImages-1352607170 (1)
Tech Stocks

Why Shopify Stock Is Skyrocketing Today

Shopify published its Q3 report this morning, and it gave investors plenty to be excited about.

Read more »