Don't Miss AI's Third Wave
It is hard to imagine what “growth stocks” can continue to rapidly grow in an uncertain tariff war environment. There could certainly be some serious downside for stocks in this uncertain economy.
However, that could create buying opportunities for long-term investors. It isn’t likely that these tariffs will last forever. Likewise, the economy, the market, and businesses will eventually adjust.
It will take time, but companies with a secret sauce of success are very likely to continue to succeed. If you can pick them up at a discount after a decline, you stand an even better chance of great returns in the long run. Here are three ultimate growth stocks to pick up if they take a pullback in the next few months.
A software stock separated from the current trade tensions
If you can’t afford Constellation Software’s (TSX:CSU) ~$4,800 stock price tag, Topicus.com (TSXV:TOI) is a great stock to consider. It was spun from Constellation in 2021. Like Constellation, Topicus is a serial acquirer of specialized software businesses.
Its focus is primarily on Europe. It is an attractive market for a serial acquirer because of the wide mix of countries, cultures, industries, regulation, languages, and governments. As a result, a huge mix of different software is required to meet each of these specific niches.
It has been a great start to the year with the company making both tuck-in and strategic acquisitions/investments. Topicus earns high recurring service revenue and generates strong free cash flow.
This is a good growth stock to hold to get some exposure outside of North America. If it can do even half as good as Constellation’s stock, investors will be very well rewarded.
A growth stock in the logistics industry
Descartes Systems (TSX:DSG) has been a great Canadian growth stock for years. Its stock is up 190% in the past five years and 648% in the past 10 years. Its stock has declined by over18% in the past month. Descartes is starting to look like an attractive buy.
It is leader in logistics and supply chain management software. It operates the leading logistics network in the world. The logistics industry is taking a beating. Obviously, tariff concerns aren’t helping. That is why this grow stock has pulled back.
However, Descartes also operates compliance and border management software. These services could enjoy significant uptake in the years ahead. During times of uncertainty, this company tends to see demand rise. It is a very profitable company, and it generates a lot of cash.
With a weakening economy, Descartes can likely be opportunistic with accretive (better-priced) acquisitions. It has a target to grow by 10-15% a year for decades. It is likely to do that if you are patient holding this steady growth stock.
A moonshot growth stock
MDA Space (TSX:MDA) stock involves higher risk but potentially higher reward. Investors need to position size this holding appropriately.
MDA is a crucial supplier for the global space industry. It has completed over 450 missions to date. Rising demand for satellite systems and geo-intelligence have been a major tailwind of growth recently.
It just delivered 2024 year-end results. For the year, revenues increase 34%, adjusted earnings rose 13%, and backlog rose 42%. Its current backlog alone could provide years of growth. Its stock is up 26% in the past month.
Keep in mind that tariff and trade uncertainty from the U.S. could upturn MDA’s plans for growth. It is a significant risk that the current stock price doesn’t reflect (hence position accordingly). If trade tensions moderate or deescalate, this growth stock could continue to rocket up (but that is an important “if” to closely monitor).
