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Investing in growth stocks is one way to accelerate your path to financial independence. However, in some years, like this, that may not really be the case. In fact, many of the most popular growth stocks are still trading over 30% below their all-time highs. At times like these, it is important that investors keep a cool head and continue to invest as they normally would. When stocks recover, you will notice that your portfolio is growing much faster. Here are three growth stocks to buy in March 2022.
Canada’s best growth stocks offer a massive discount
As of this writing, investors still have the option to buy Shopify (TSX: SHOP) (NYSE: SHOP) shares at a massive discount. It is currently trading over 50% below its all-time highs. When reviewing Shopify’s recent stock performance, investors should keep the bigger picture in mind. There are two reasons why Shopify’s stock has fallen so sharply. First, being a potential increase in interest rates. Second, the company announced that it expects its growth rate to slow to pre-COVID numbers.
Taking a closer look at these two main drivers of Shopify’s stock decline, it’s clear that neither is expected to have a long-term impact on the business. Yes, higher interest rates make it harder for businesses to grow. However, Shopify is already a profitable business. Therefore, it should not need to borrow a lot of capital to finance its growth. Second, Shopify’s growth rate before the pandemic was quite high, around 30-40%. It was completely unreasonable to expect the company to maintain an 80% year-over-year growth rate after the pandemic.
Shopify has been a big winner in the stock market since its IPO. I believe the best is yet to come.
This stock could be a huge winner
Topic.com (TSXV:TOI) is much less well known than Shopify. However, I’m willing to bet that in a decade it will be one of the most popular growth stocks among Canadian investors. Topicus is an acquirer of vertical market software companies. If this sounds familiar, it might be because you know Constellation Software. In fact, Topicus was a subsidiary of Constellation Software until February last year when it was spun off into its own entity.
What differentiates Topicus from its former parent company is its focus on the highly fragmented European tech industry. What makes this even more attractive is that the European market tends to be less targeted by venture capitalists. This gives Topicus the opportunity to acquire companies at a more attractive valuation than Constellation faced in its early days. Topicus has access to Constellation’s vast expertise, as six of its board members are Constellation executives.
If Topicus can follow the playbook that made Constellation Software the tech giant it is today, then investors have a great opportunity for some serious returns.
A stock that could be a real powerhouse
When I think of secular trends that may continue to be present over the next decade, I think of renewable energy. Specifically, I believe that renewable energy utilities will play a very important role in the daily functions of society by the end of the decade. Because of this, Brookfield Power (TSX:BEP.UN)(NYSE:BEP) is a company that should find a place in your portfolio.
Brookfield Renewable operates a diverse portfolio of assets capable of generating over 20,000 MW of electricity. Upon completion of its current construction projects, the company expects to more than double its current production capacity. This would cement Brookfield Renewable as one of the world’s leading renewable energy producers.
