TOI:CC - 1 Growth Stock I'm Buying Hand Over Fist Despite the Market's Pessimism
2024-03-22 16:20:00 ET
When it comes to growth stocks, there are many investors who would be quite wary picking up tech stocks in this batch. Granted, there are enough reasons there. The tech sector has seen its fair share of growth as well as losses in the last year.
Yet when it comes to one growth stock in particular, this is one I continue to buy again and again. And honestly, the company continues to give me reasons to continue this strategy.
So, let’s look at why Topicus ( TSXV:TOI ) might also work in your portfolio.
A Constellation spinoff
If you’re not familiar with Topicus stock, it’s really just a spinoff of Constellation Software ( TSX:CSU ). CSU stock has been around for over a decade and is a company specializing in enterprise software. The company purchases software across specific industries and niche markets. This has allowed it to identify valuable companies that need a boost, with CSU swooping in to offer it for these essential software providers.
Now, the company has grown so high in share price and global reach that it’s spun out through Topicus stock. The company is virtually the same. The only difference? Topicus stock operates in Europe instead of North America or other countries.
Management remains the same, with CSU operating in tandem with Topicus stock. Therefore, if you’re at all wondering about the future of this stock, it would be prudent to simply look back at how CSU stock performed in the past. This is why I’ve been so enamoured with the company since it trades for a fraction of the share price.
Proof is in the earnings
Now that Topicus stock has been around for the last year and a bit, the company has been able to demonstrate full-year earnings. And this recently came out back in February, with the company demonstrating even more growth — growth that led to another increase in share price.
For the fourth quarter, revenue was up 17% year over year, with a 7% increase in organic growth. This achieved €309.7 million compared to €263.7 million in the fourth quarter of 2022. Net income also increased significantly, almost double where it was the year before, with cash flow from operations (CFO) rising by an incredible 30%!
As for the full year, 2023 was significantly strong. Revenue was up 23%, with again 7% from organic growth, reaching €1,125 million compared to €916.7 million in 2022. Net income came to €115.4 million (€0.88 per diluted share) compared to €87.6 million (€0.66 per diluted share) in 2022. Again, almost double! Finally, CFO increased by 21% to €246.6 million, with free cash flow available to shareholders surging by 126% to €123.4 million.
What’s next?
The company completed €28.5 million worth of acquisitions , totalling €132 million for the year as well. And that means even more growth for the company is on the way.
In fact, both CSU stock and Topicus stock are so confident in future growth the companies announced a special dividend! This is a one-time payment by a company outside regular dividend payments, coming along when a company is doing particularly well.
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Topicus stock announced a €1.54 special dividend per unit, with shareholders receiving a total of about €200 million in special dividends. This will be payable by March 28 for shareholders of record as of March 15.
With all that in mind, there are many reasons to consider buying this growth stock. And frankly, I’ll continue to do so no matter what the market does.
The post 1 Growth Stock I’m Buying Hand Over Fist Despite the Market’s Pessimism appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has positions in Topicus.com. The Motley Fool has positions in and recommends Topicus.com. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy .
2024