Multi-baggers don’t get mentioned much these days. The stock market is down 10.9% over the past year, and much of that is because of multi-bagger tech and growth stocks losing steam. The era of easy money and skyrocketing stock prices seems over. But it isn’t.
Some companies have managed to sustain their growth rate, despite the recession and market downturn. These companies are growing so fast that they could potentially turn every dollar invested into $5 within seven years. Here’s a closer look at two top stocks that could be multi-baggers before 2030.
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Aritzia
Luxury fashion brand Aritzia (TSX:ATZ) seems to have avoided the downturn in consumer confidence. Net revenue was up in recent quarters. It jumped 37.8% in the third quarter of 2022. In the second quarter, it was up 50.1%. Put simply, the company is thriving, even as consumers cut back. Apparently, Aritzia shoppers are untouched by the inflation wave affecting the rest of us.
Part of the growth is driven by the company’s rapid expansion in the United States. Another aspect is the rise in online sales. Aritzia’s e-commerce platform has outperformed most luxury brands in this environment.
These strong fundamentals aren’t reflected in the stock price. The stock is down 19.9% over the past year. That’s pushed the price-to-earnings ratio down to just 25. Put simply, Aritzia is undervalued.
If it can sustain a 30% growth rate for the next seven years, it could turn a $10,000 investment into $62,700.
Constellation Software
Enterprise software is in a much better position than the rest of the technology sector. In fact, Constellation Software (TSX:CSU) has outperformed not just the tech sector but the rest of the stock market. Constellation’s stock is up 7.11% over the past year. Meanwhile, the S&P/TSX Composite Index is down 10.7% over the same period.
Constellation’s outperformance stems from its robust client base and balance sheet. Constellation owns and operates a range of enterprise software companies that deal with mundane tasks like accounting and inventory management. About half of its client base is government agencies. That means its cash flows are secure.
In its latest quarter, Constellation delivered revenue growth of 33%. However, organic growth was down 3% over this period. Instead, Constellation’s growth is driven by acquisitions. Over the past year tech valuations have plummeted, and the Constellation team has ramped up its investments, which means investors can expect a bigger boost from mergers and acquisitions in the quarters ahead.
At 33% growth, Constellation stock could turn $10,000 into $73,600 by 2030. Even if the growth rate drops to 28%, the stock could be a multi-bagger over the next few years. Constellation has delivered a whopping 12,835% total return since going public in 2006. That’s why this blue-chip tech stock deserves a top spot on your growth watch list.
