After around 10 months of constant ups and downs, the S&P/TSX Composite Index gained some sustained momentum in November 2023. As of this writing, the Canadian benchmark index is up by an incredible 10.83% from its October 27th level.
While it is important not to become complacent about further market volatility, now is not the time to completely ignore high-growth potential stocks for your self-directed portfolio.
Due to the broader uptick, several top-notch growth stocks have seen share prices rise. Many solid growth stocks are still flying under the radar. If you have positioned your self-directed portfolio to stave off the effects of a bear market, you might have some room to allocate capital to growth stocks.
Interest rate hikes have paused and might even be trimmed by the Bank of Canada sooner than anticipated. The market has the potential to deliver further growth in the coming weeks, especially as we head into 2024. While nobody can guarantee a growth-filled year, several TSX stocks are worth keeping on your radar.
Today, I will discuss two high-quality growth stocks that can deliver stellar returns in 2024 and beyond.
Constellations Software
Constellation Software (TSX:CSU) is a $68.47 billion market capitalization software company headquartered in Toronto. While it is a tech stock, Constellation Software is an atypical bet in the industry. Most tech stocks have garnered a reputation for offering high growth with high risk. Constellation Software operates with a business model that contradicts its peers in the sector.
The firm acquires, manages, and builds vertical-specific businesses. The well-capitalized company identifies high-quality tech companies, acquires them, and utilizes its experience and capital to grow them under its banner.
Through its well-managed strategy, CSU stock has delivered consistent growth for several years. It can be an excellent addition to your self-directed portfolio if 2024 turns out to be a bullish year for the stock market.
Gildan Activewear
Gildan Activewear (TSX:GIL) is a $7.61 billion market capitalization company that might not need introductions. The Montreal-based brand manufacturers a range of basic apparel, with most of its revenue coming through blank T-shirts sold to wholesalers and printers. Gildan also sells branded clothing through its retail and direct-to-consumer channels.
Gildan Activewear stock saw its share prices surge after reporting strong earnings in its most recent quarter. Its net sales grew by 2% year over year, and its cash flow from operations rose to $305 million. Its last quarter also saw the company continue its share-buyback program, and it expects to end the year with a free cash flow of over $425 million.
That said, it is a retail company operating in a difficult market. As of this writing, it trades for $44.07 per share, up by 17% year to date. Trading at 12.64 times trailing earnings, it is undervalued and can deliver substantial growth through capital gains in 2024. However, it is the riskier of the two to consider for your self-directed portfolio.
Foolish takeaway
Despite the strong momentum of the Canadian benchmark leading into 2024, it is essential to remember not to get carried away with investing in growth stocks. Analysts have many reasons to be hopeful about a better year for stock market investing in the coming year, but it is important to practice caution with how much capital you allocate to high-risk investments.
Suppose you have a well-balanced portfolio ready to offset losses from market volatility. In that case, investing some money in Constellations Software stock and Gildan Activewear stock can be a good way to inject some growth into your investment portfolio.
