A Bull Market Is Coming: 3 Growth Stocks That Could Thrive

Growth stocks like Kinaxis Inc (TSX:KXS) could thrive in the next bull market.

| More on:
A plant grows from coins.

Source: Getty Images

A bull market in stocks is coming. One might even say that it’s forming now. Since hitting a bottom in October 2022, stocks have rallied, with the TSX Composite Index having gained 7% from the lows. We still have a ways to go before we can declare that a new bull market has arrived, but it does look like one is taking shape.

What kinds of stocks would be most suitable to buy in an environment like this one?

There are many options, but growth stocks would have to be near the top of the list. Growth stocks, especially tech stocks, were the category of equities that fell the hardest in the 2022 bear market. Since they are the most beaten-down stocks at the moment, they probably have the most bargains among their ranks.

In this article, I’ll explore three growth stocks that may be worth buying ahead of the next bull market.

Kinaxis

Kinaxis (TSX:KXS) is a growth stock that I have considered buying. It is a supply chain management software company that helps people manage their essential business functions. Its software uses artificial intelligence (AI) to help businesses predict variables that are relevant to managing their supply chains. For example, Kinaxis’s demand planning feature can forecast times when customers are likely to be buying in high volumes, so that the user can budget for an increase in inventory on those dates.

How is this strategy working for KXS? It’s going pretty well, it seems. In the company’s most recent quarter, revenue grew 44%, gross profit grew 40%, and net income swung from a loss to a $0.30-per-share profit. The stock is certainly not cheap, trading at 86 times earnings and 10 times sales. However, the growth is really spectacular.

Taiwan Semiconductor

Taiwan Semiconductor Manufacturing (NYSE:TSM) is a Taiwanese company that manufactures computer chips. It does not design chips, it takes the designs from manufacturers, builds the chips based on the blueprints, then sells them to the manufacturer that ordered the chip. This might seem like a straightforward business model, but TSM is better at it than any of its competitors are, controlling a whopping 60% of the market.

This year, many semiconductor companies are struggling with declining sales and earnings. Not TSM. In its most recent quarter, its revenue increased 43%, and its earnings increased 78%. That’s some pretty solid growth, yet TSM trades at a mere 15 times earnings. It’s definitely a combination of growth and value that you don’t see very often.

PDD Holdings

PDD Holdings (NASDAQ:PDD), better known as Pinduoduo (the name of one of its services), is a Chinese e-commerce company. It is best known in North America for the app Temu, which allows customers to buy deeply discounted Chinese products and have them shipped to their doorstep reasonably quickly. The app launched just last September, and it seemed to do well post-launch: it quickly reached the number one spot on the U.S. app store charts.

Is that translating into good earnings for PDD Holdings? Tentatively, it seems like the answer to that question is yes. In its most recent quarter, PDD’s revenue increased 43%, its operating income increased 32%, and its adjusted earnings increased 46%. It’s hard to say how much of that growth came from Temu, but whatever way you look at it, PDD is a growing company. It doesn’t hurt that it only trades at 20 times earnings, either!

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 Andrew Button has positions in Taiwan Semiconductor Manufacturing and Pinduoduo. The Motley Fool recommends Kinaxis and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

More on Investing

space ship model takes off
Dividend Stocks

Passive Income: How to Invest Your TFSA Limit in 2025

TFSA income investors still have good options heading into 2025.

Read more »

people relax on mountain ledge
Dividend Stocks

2 Reasons to Buy Gildan Activewear Stock Like There’s No Tomorrow

Here are two main reasons why Gildan Activewear stock could be a great buy now, especially for long-term investors.

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

2 Must-Watch Dividend Stocks for December

Consider Quebecor (TSX:QBR.B) and another intriguing dividend stock to buy on weakness for December.

Read more »

data center server racks glow with light
Dividend Stocks

Billionaires Are Selling NVIDIA and Picking Up This TSX Stock

Brookfield Corp (TSX:BN) is seeing increased buying by billionaires, while NVIDIA (NASDAQ:NVDA) is seeing increased selling.

Read more »

An investor uses a tablet
Tech Stocks

1 Top Tech Stock That’s a Top Pick for Canadian Investors in November

Amazon (NASDAQ:AMZN) is a top AI stock that's on sale after a recent plunge off highs.

Read more »

oil and gas pipeline
Energy Stocks

Best Stock to Buy Right Now: TC Energy vs Enbridge?

These TSX energy infrastructure giants are on a roll.

Read more »

woman analyze data
Investing

These Are My Top 3 Undervalued Stocks for Canadian Investors to Buy Now

These three undervalued TSX stocks have solid growth prospects and could generate significant returns over time.

Read more »

hand stacks coins
Dividend Stocks

This 7.7 Percent Dividend Stock Pays Cash Every Single Month

This TSX income stock has been paying above-average yields for decades now.

Read more »