Investing in top-quality growth stocks can help you generate above-average returns and multiply your capital in the long term. Thus, investors should consider adding a few fundamentally strong growth stocks to their portfolios to achieve their financial goals faster. However, it’s important to be cautious when selecting growth stocks, as higher returns come with higher risks.
With that in the background, here are three Canadian stocks everyone should own. These growth stocks have the potential to grow rapidly and deliver stellar returns.
goeasy
Speaking of top-quality growth stocks, goeasy (TSX:GSY) tops my mind. This leading financial services company provides lending services to subprime borrowers. What stands out is that goeasy consistently generates double-digit revenue and earnings growth regardless of market conditions.
For example, goeasy’s revenue has increased at a compound annual growth rate (CAGR) of 20.03% in the last five years (as of March 31, 2024). Moreover, goeasy’s earnings per share (EPS) sports an impressive five-year CAGR of 32.2%.
Thanks to its solid growth, goeasy stock has consistently outperformed the broader markets and created significant wealth for its investors. In the last five years, goeasy stock has gained over 330%, reflecting a CAGR of 33.8%. Besides the stellar capital gains, goeasy has enhanced its shareholders’ value by increasing its dividends for 10 consecutive years.
Its leadership in the subprime lending segment, a large addressable market, and solid underwriting capabilities support its top and bottom-line growth.
Looking ahead, goeasy’s omnichannel offerings, growing loan portfolio, geographical expansion, and diversified funding sources will likely boost its top line. Further, leverage from higher sales and operating efficiency will cushion its earnings, support its dividend payouts, and drive its share price higher.
Aritzia
Luxury clothing company Aritzia (TSX:ATZ) is another growth stock to own. Like goeasy, Aritzia top and bottom lines have grown at a double-digit rate over the past five years. Aritzia’s growth rate slowed a bit in the recent past. Nonetheless, it has already implemented measures to reaccelerate its growth, supporting its revenue and EPS.
The company’s net revenue sports a five-year CAGR of 19%. At the same time, its adjusted net income grew at a CAGR of 13%. Moreover, its e-commerce revenue increased at a CAGR of 37%.
Aritzia is focused on enhancing its online customer experience, introducing new styles, expanding omnichannel offerings, and broadening its product range, which will drive traffic. Moreover, it is leveraging technology and data analytics to optimize its product portfolio, which will likely boost its financials.
Most importantly, the company is expanding its geographic presence, which will accelerate its growth. Aritzia aims to launch eight to 10 new boutiques annually through fiscal year 2027. Further, its focus on improving inventory and operational efficiencies augurs well for EPS growth.
Shopify
Shopify (TSX:SHOP) is another Canadian growth stock with the potential to deliver solid gains and compound shareholders’ wealth in the long run. The e-commerce platform provider is well-positioned to capitalize on the digital shift and deliver durable revenue growth.
Shares of this Canadian tech giant are down around 19% year to date on fears of a slowdown in e-commerce growth. However, the company’s fundamentals remain strong, and this pullback provides an opportunity to buy.
Shopify’s ability to consistently grow its merchandise volumes will likely drive its revenue at a healthy pace. Furthermore, its innovative product launches and addition of multi-channel sales platforms will likely drive its paying merchant base. Adding to the positives, Shopify is transitioning towards an asset-light business model and is witnessing an improvement in its take rate. This will help the company deliver sustainable earnings in the long term and drive its stock higher.
