When investors see stocks hitting all-time highs after all-time highs, it can be difficult to take a position. Many will choose to wait for a correction before buying shares of a high-profile company. However, if you choose to stick with this method of investing, it is important to understand that you could wait a very long time. In fact, buying stocks of companies that manage to consistently reach new all-time highs is a fundamental quality of dumb investors.
Nuvei (TSX: NVEI) and Topic (TSXV: TOI) are two stocks that have seen incredible growth this year. Is it too late to buy these stocks? In this article, I will discuss whether investors should consider adding these two stocks to their portfolio.
The e-commerce industry will help move this stock forward
Right now, very few trends have such a widespread impact as the rise of the e-commerce industry. In developed countries, the online shopping industry accounts for a greater proportion of all retail sales than it has ever done before. In Canada, online sales accounted for over 11% of all retail sales in April 2020. This is an increase of almost 300% from the 4% of retail sales represented by online shopping. in 2019. As this industry continues to grow, payment processors like Nuvei are expected to generate massive gains.
In its latest earnings report, the company said it saw a 114% increase in quarterly revenue year over year. In the first half of the year, Nuvei reported a 97% year-over-year increase in total revenue, showing that the second quarter was no fluke. The company’s strong report resulted in a 15% increase in its shares the day after the results. Led by a visionary Founder-CEO, investors seem very drawn to Nuvei’s growth story. With a market capitalization of $ 23.5 billion, this stock still has a lot of room for improvement.
Learn from one of the best
Topicus is not a name that many retail investors are familiar with. If this sounds like you, a quick summary of what this company does is that it acquires vertical market software companies in Europe. While you may not be familiar with Topicus, there is a good chance that you know of other companies that operate similar businesses. The one that should come to mind is Constellation Software, which has seen its stock increase by nearly 12,000% over the past 15 years.
Should investors be concerned that Topicus is operating in the same industry as Constellation Software? I believe they shouldn’t. In fact, it should be a fact that makes you want to consider investing in this business. Constellation Software was Topicus’ parent company until last February, when Topicus was split into its own entity.
Although it now operates as a separate company, Topicus is still heavily influenced by Constellation Software. The largest company has a significant stake in Topicus. In addition, six Constellation Software executives sit on the Topicus Board of Directors, including Mark Leonard.
Topicus’ massive gain this year might indicate that its management team was able to take advantage of the advice Constellation Software was able to give to the young company. With a market cap of $ 5 billion, don’t think for a second that Topicus’ best growing days are behind it.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content.
Foolish contributor Jed Lloren has no position in any of the stocks mentioned. The Motley Fool owns stock and recommends Constellation Software and Topicus.Com Inc. The Motley Fool recommends Nuvei Corporation.