Got $5,000? These 2 Growth Stocks Are Smart Buys

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Growth from currencies

when Market volatility In both hits and market falls, most investors tend to focus on the immediate short-term effects of those falls. Unfortunately, the long-term impact of buying discounted stocks is neglected. These include some stellar growth stocks that can be classified as smart buys.

Now look at two options to consider for your portfolio.

First, the tech darling has had a rough year

There are few stocks in the market that could face stellar growth Shopify (TSX:Shop) The e-commerce titan has seen incredible growth in recent years, and that growth went into overdrive when the pandemic hit.

Unfortunately, over the past 12-month period, Shopify’s stock has fallen more than 50%.

So, why is Shopify a smart purchase to consider now?

During the pandemic, consumers turned to mobile commerce rather than needlessly shopping in person. It accelerated a change that had been years in the making. As stores reopened and traffic returned to brick-and-mortar stores, Shopify’s pump began to erode.

Then we have interest rates and inflation. The rising cost of everything is forcing consumers to pay more attention to where and how they spend their money. And for Shopify, the cost of borrowing to finance additional growth efforts is rising.

Another thing that’s on the rise is Shopify’s need to make a profit. That’s where Shopify’s recently announced hikes to its pricing structure come into play. That increase is the first in a decade where Shopify has aggressively sought out and added add-ons and features to its growing platform.

Shopify may be one of the smart purchases to consider Right now, but that discount won’t last forever. The stock has already gained up to 30% in the past month.

At the time of writing, a $5,000 investment would get you over 76 shares of Shopify.

Now everyone’s favorite retailer

When the market fluctuates and consumer spending slows down, it changes. Retail shares. Consumers will shift to buying more economical products, buying in bulk and switching to discount brands.

Part of that change is visiting a dollar store Dollarama (TSX:DOL)

Dollarama is Canada’s largest dollar store operator and operates a growing international network under the Dollar City brand. The company is one of the smart buys every investor should be looking at right now.

In addition to its value appeal to shoppers, Dollarama uses a unique pricing model. The retailer prices products at fixed price points up to $5. Dollarama also bundles many low-priced items, giving shoppers even more value.

That value proposition is one of the main reasons shoppers flock to Dollarama stores despite the chilly economy. In fact, in the most recent quarter, Dollarama grew 10.8% in comparable store sales. This helped sales for the quarter reach $1,289.6 million, representing an impressive 14.9% improvement.

Looking forward, Dollarama expects that growth to continue. The company predicts that it will have a network of 2,000 stores within the next decade.

Despite inflationary pressures in the market, those stellar results helped Dollarama’s stock continue to rise. In fact, over the trailing 12-month period, Dollarama stock is up more than 20%.

At the time of writing, a $5,000 investment would buy 63 shares of the retailer. Prospective investors should note that Dollarama also pays dividends. The yield is just 0.22%, but Dollarama has delivered generous annual growth for more than a decade.

Will you buy these smart bags for your portfolio?

Both Dollarama and Shopify are unique options that can deliver long-term growth for years to come. While neither stock is without some risk, both stocks are good as a small part of a well-diversified portfolio in my opinion.

Position Got $5,000? These 2 growth stocks are smart buyers appeared first Motley Fool Canada.

Want to invest $1,000 in Dollarama?

Before considering Dollarama, you should ask this.

Our team of market-beating analysts just revealed what they believe are the 5 best stocks for investors to buy in January 2023… and Dollarama isn’t on the list.

Motley Fool Stock Advisors Canada, their online investment service for nearly a decade, is underperforming the TSX by 16 percentage points. Now, they think 5 stocks are the best buys.

See 5 stocks
*Returns through 1/9/23

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Further reading

Fool Contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Shopify. A motley fool Disclosure Policy.


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