This recent bull market rally is one that has led to a number of soaring stocks taking flight yet again. The hype-driven rally we saw in 2021 appears to be repeating, with many growth stocks seeing impressive upside in this current market.
Of course, the reality is that most soaring stocks tend to come back down to earth after hype cycles cool. However, certain high-growth stocks have maintained their impressive growth trajectories for a long time, with certain Canadian stocks generating specific interest from long-term investors for this reason.
Here are two top Canadian soaring stocks I think investors can buy at current levels.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) may be a well-known Canadian operator of gas stations and convenience stores, but it’s a company that’s much less well-known among investors in other countries. The company’s portfolio includes more than 12,000 stores in a wide range of countries in North America and Europe, operating under key banners such as Circle K, Couche-Tard, Holiday, Ingo, and Mac’s.
Couche-Tard has continued to see consistent top- and bottom-line growth in recent years, fueling a fundamentals-driven rally. The company’s earnings per share grew at a healthy 8.6% clip over the past three years, with a still-attractive price-to-earnings ratio of around 18 times, suggesting this stock could have much more room to run. Notably, Couche-Tard stock also exhibits a beta of 0.87, meaning the company is much less volatile relative to the overall market. For long-term investors seeking stability, that’s a great thing.
Now trading near its all-time high, some investors may want to see a pullback before buying shares of ATD stock here. However, I’m of the view that this is a company with a reasonable valuation and strong long-term growth prospects. Until something changes, this stock is worth accumulating and holding for at least another decade.
Constellation Software
Canada-based Constellation Software (TSX:CSU) develops and customizes software for private and public sector markets. The company focuses on acquiring, managing and building vertical-specific software businesses. Constellation Software operates in both the public and private sectors, servicing a wide range of clientele from credit unions to communications providers, tour operators, beverage distribution companies, auto clubs, and more.
Constellation Software has continued to see its cash flow growth outpace investor expectations, leading to the stock chart investors see above. Indeed, few Canadian software companies have a chart like this, and Constellation continues to prove its ability to compound its existing growth via new acquisitions over time.
Using a growth-by-acquisition model, Constellation has accumulated a wide range of software and software-related businesses that benefit from operating under the Constellation umbrella. For 2024, Constellation has forecasted it will increase its revenue from $9 billion in 2022 to $13.22 billion. That could lead adjusted earnings per share to surge around 40% this coming year, with analysts projecting similar bottom-line growth out to 2027.
If Constellation can continue to fire on all cylinders, this is a stock investors would do well to watch closely. I’m of the view that this software name is worth buying on any significant dip and holding for the very long term.
