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The Canadian stock market concluded 2023 on a strong note, with the S&P/TSX Composite Index surging over 10% in the last two months of the year. This robust finish, combined with the potential for flat or even reduced interest rates in 2024, has created an optimistic outlook for investors. Despite the persisting volatility, the TSX presents compelling opportunities for those willing to exercise patience. Here are the top three TSX growth stocks to consider adding to your watchlist in 2024:
1. Shopify (TSX:SHOP):
Shopify, Canada's tech giant, experienced a remarkable rebound in 2023, with shares surging over 100%, contributing to a market-crushing 450% gain over the past five years. Despite this strong performance, the stock still trades at a 50% discount to its all-time highs from 2021. As a relatively young company, Shopify may entail volatility, but its potential to outperform the market in the long run remains substantial. Investors may find an opportunistic moment to invest in this top company.
2. Constellation Software (TSX:CSU):
For growth investors seeking to minimize risk, Constellation Software stands out as a market-beating stalwart. Priced at over $3,000 per share, the tech stock has demonstrated its worthiness despite its steep valuation. With a market cap exceeding $70 billion, Constellation Software has delivered over 250% returns in the past five years, significantly outperforming the broader Canadian stock market. While it may have passed its multi-bagger years, the company's consistency in delivering market-beating returns makes it a compelling investment.
3. Northland Power (TSX:NPI):
Northland Power, a renewable energy company, offers growth potential and the opportunity for passive income. The renewable energy sector has faced challenges since 2021, leading to a 50% decline in Northland Power shares, excluding dividends, since the beginning of 2021. Despite recent struggles in the sector, the long-term growth prospects for renewable energy providers are undeniable. As a Canadian leader with an international presence, Northland Power provides exposure to the expanding renewable energy space. With a dividend yield of just under 5%, the company has a history of delivering both market-beating returns and consistent income.
These growth stocks present diverse opportunities for investors in 2024, from tech giants Shopify and Constellation Software to the renewable energy focus of Northland Power. It's essential for investors to conduct thorough research and consider their risk tolerance before making investment decisions.
