SHOP:CC - Looking North of SPY Stock: Why Canadian Investors Are Turning Home for Growth
2023-07-08 09:30:00 ET
It’s no secret that the American stock exchange has a history of excellent growth. Let’s take a quick look at the SPDR S&P500 ETF Trust ( NYSEMKT:SPY ). Over the past five years, that exchange-traded fund (ETF) has gained more than 61%. In comparison, the iShares S&P/TSX 60 Index ETF ( TSX:XIU ) has only gained about 26% over the same period. This shows that the American stock market has grown much more over the past five years.
So then, why are Canadian investors turning home for growth? In this article, I’ll discuss why this may be happening.
Canadian stocks are booming
One reason why Canadians may be looking north for growth is because certain big-name stocks have been showing excellent performance over the past few months. Take Constellation Software ( TSX:CSU ) for example. If you’re not familiar with this company, know that it’s a consolidator in the tech sector. Constellation Software acquires top-notch vertical market software (VMS) businesses. Upon acquisition, it then provides the coaching and resources necessary to turn those into exceptional business units.
For most of its history, Constellation Software has focused on acquiring small- and medium-sized VMS businesses. That has proven to be a very successful endeavour for the company. However, in 2021, Constellation Software’s president and founder, Mark Leonard, announced that the company would finally start targeting large VMS businesses for acquisition. He also noted that these acquisitions may look different, as Constellation Software finds ways to fund such activities.
Earlier this year, Constellation Software performed a spinout of Lumine Group in order to fund the acquisition of WideOrbit. Investors could expect to see more actions of this nature when Constellation Software targets larger companies for acquisition.
With respect to its stock, Constellation Software has gained just over 42% over the past year. That suggests that even though the company has grown tremendously over the past 16 years, it still shows no signs of slowing down. If you’re looking for a great Canadian stock to buy for growth, then Constellation Software appears to be an excellent pick today.
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Consider this excellent company
Many investors have turned sour on Shopify ( TSX:SHOP ) due to its terrible performance through 2022. However, the e-commerce industry still has a lot of room to grow, and Shopify remains one of the biggest players in that space. In addition, the stock has started to show signs of light once again.
In the first quarter of 2023, Shopify reported US$1.5 billion in revenue. That represents a 25% year-over-year growth. The company is in an excellent position to continue growing that revenue stream thanks to a 10% share of the U.S. e-commerce industry.
Over the past year, Shopify stock has been skyrocketing. The stock has gained 112% and appears to be on its way to climbing even higher. Investors should note that the stock still trades at a 60% discount from its all-time highs. Although I think it’ll be quite some time before Shopify can return to those levels, I think it’s certainly a possibility. With founder Tobi Lütke continuing to lead the way, I remain very confident in this company.
The post Looking North of SPY Stock: Why Canadian Investors Are Turning Home for Growth appeared first on The Motley Fool Canada .
Fool contributor Jed Lloren has positions in Constellation Software, Lumine Group, and Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy .
2023