Don't Sleep on These Growth Stocks With Incredible Historical Returns
Written by Chris MacDonald at The Motley Fool Canada
The stock market is clearly in a state of turmoil right now. For Canadian stocks, this turmoil has been driven, at least in part, by tariffs put in place by the Trump administration. What happens on that front is anyone's guess. However, moving forward, investors who are thinking long term and looking for growth stocks to buy certainly have their work cut out for them.
I do think there are some relatively attractive growth opportunities in Canada with the potential to whistle past the volatility. Here are two of my top ideas for investors looking to position their portfolios for growth right now.
As far as Canadian software stocks are concerned, Constellation Software (TSX:CSU) remains my top pick in this space. There are many reasons for this, but looking at the company's stock chart below, it's clear that long-term investors have done well by doing, well, nothing but holding this name long term.
I think that will continue to be the case over the long term, due mostly to Constellation's underlying business model. The company has grown to its massive size over time by implementing a growth-via-acquisition business model. What Constellation does is identify software companies with strong growth potential, acquire them before they grow too large, and utilize the company's size, scale, and network effects to take these companies to new heights.
This model has resulted in very strong revenue growth of 20% this past year. Of course, organic growth is part of the story (with organic sales growing around 2% a year). That's not bad, and there's room for improvement. Accordingly, I think there's actually an argument to be made that Constellation could see revenue and earnings growth accelerate moving forward.
Analysts continue to view Constellation as a moderate buy, but I think this is a stock that looks relatively attractive given its growth upside. Investors will need to pay up for this high-quality, growth with CSU stock trading around 94 times trailing earnings. But in this market, I think it makes sense to pay up for quality, and Constellation Software remains one of my top picks for this reason.
Another top growth stock I continue to pound the table on is Boyd Group (TSX:BYD). The auto body repair company has also seen impressive long-term growth due to a similar underlying strategy. Rather than software companies, Boyd focuses on consolidating the still-fragmented auto body repair market.
Boyd's business model is certainly less attractive than Constellation's in terms of the companies Boyd focuses on acquiring. But both companies have interestingly produced similar long-term growth rates, and that's reflected in Boyd's long-term stock chart above.
Boyd's 15% revenue growth rate in past quarters is certainly impressive for the industry it operates in, and this is a stock that analysts are also bullish on. Boyd has a consensus buy rating and significant upside over the near to medium term, at least according to the experts. I think they're right on this one, given the company's ability to continue growing by acquiring a larger number of large targets over time.
That's supported by a solid balance sheet and debt-to-equity ratio of 0.75. So long as folks continue to drive their cars longer (seeking more repairs), companies like Boyd should be a winner from a potential continued downturn moving forward. That fact alone positions this company as a top defensive growth stock to buy now, in my view.
The post Don't Sleep on These Growth Stocks With Incredible Historical Returns appeared first on The Motley Fool Canada.
Before you buy stock in Boyd Group Income Fund, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Boyd Group Income Fund wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $20,697.16!*
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More reading
Best Canadian Stocks to Buy in 2025
Market Volatility Toolkit
4 Secrets of TFSA Millionaires
Beginner Investors: 4 Top Canadian Stocks to Buy for 2025
5 Years From Now, You'll Probably Wish You Grabbed These Stocks
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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Boyd Group Services and Constellation Software. The Motley Fool has a disclosure policy.
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