SHOP:CC - 2 Potentially Explosive Stocks to Buy in January

2024-01-04 10:00:00 ET

As the global economic landscape continues to evolve going into another year of stock market trading, Canadians are finding ways to make the most of their investment capital. After a tough year of ups and downs, the S&P/TSX Composite Index finally picked up pace from the end of October 2023. As of this writing, the Canadian benchmark index is up 11.63% from its October 2023 52-week low.

The start of the year is as good a time as any to rebalance your self-directed investment portfolio. If you are looking for holdings that can potentially deliver outsized returns, allocating money to high-quality growth stocks is a good approach.

So, for those looking to rebalance their portfolios for some diversification and a little more risk tolerance, here are two growth stocks that can be good holdings in January 2024 and beyond.

Shopify

Shopify ( TSX:SHOP ) is the first stock that I think investors should consider adding to their portfolios in January 2024. The $126.35 billion market capitalization company headquartered in Ottawa is a giant in the global e-commerce space.

The cloud-based ecommerce platform provider is estimated to be empowering over a million merchants for their online stores. Due to the massive breadth of its offerings, Shopify can cater to merchants of all sizes.

2022 was not a good year for Shopify stock due to macroeconomic jitters and the tech sector meltdown. However, investors who stuck with the stock saw massive rewards for their confidence in the company in 2023. The stock gained by 111% in 2023, with many investors feeling they missed out on a great opportunity to capture the capital gains.

As of this writing, Shopify stock trades for $98.39 per share. Considering that it still trades at less than half the value of its November 2021 all-time highs, I believe there is plenty more upside yet to come. If macroeconomic factors continue to improve, the rapid growth of the e-commerce industry can see the stock soar to even greater heights in 2024 and beyond.

Magna International

Magna International ( TSX:MG ) has been one of the harder-hit stocks over the last few years. The $22.61 billion market capitalization company is a Canadian parts manufacturer for automakers that has faced its fair share of challenges due to being in an overall difficult industry.

While supply chain issues rattled the entire world, Magna stock managed to stick around. The pandemic-induced restrictions saw a reduced demand for new cars. While restrictions were lifted, the dwindling demand did not pick up pace, even as Magna stock got its assembly lines back up and running again.

2023 saw a good shift, especially as Magna International expanded its presence in the electric vehicles (EV) and autonomous vehicles markets. The most recent quarterly earnings report reflects an improvement in its financial performance.

The company reported a 15% increase in its year-over-year sales in the quarter. Its adjusted diluted earnings per share also jumped by a third in the same period compared to last year. After coming to an agreement on a labour strike, Magna International stock has increased its outlook for adjusted earnings before interest and taxes.

As of this writing, Magna International stock trades for $78.89 per share. Up by 22.48% from its 52-week low, it still trades at a 37.01% discount from its June 2021 all-time high. As the company’s performance improves, there might be more capital gains for investors to capture in the coming weeks.

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Foolish takeaway

Considering the consistent uptick in the broad market index over the last several weeks, the TSX might be entering a bull market environment soon. Having a healthy proportion of defensive stocks is a must. However, a truly well-balanced investment portfolio also comprises a good mixture of high-growth-potential holdings.

To this end, Shopify stock and Magna International stock can be excellent investments to consider for your self-directed portfolio. If you have a well-balanced portfolio and do not mind taking on a little risk for the potential of outsized returns, consider adding these to your portfolio while share prices are still reasonable.

The post 2 Potentially Explosive Stocks to Buy in January appeared first on The Motley Fool Canada .

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy .

2024