With the fall approaching, investors looking for explosive growth certainly may find the next few months a difficult time. Indeed, the September/October months tend to be among the worst in the stock market. That’s just the cyclical nature of what the market does. For growth stocks that have taken off this year, the valuations these equities are trading at may be a deterrent to some investors looking to take profits here.
That said, there are some growth stocks that are trading at relatively decent valuations with excellent potential. I’ve got two such stocks atop my list for investors interested. Let’s jump in.
Top growth stocks: Restaurant Brands
An unlikely growth stock on many investors’ lists, Restaurant Brands (TSX:QSR)(NYSE:QSR) remains a top pick of mine. This is a leading fast-food play in the market, with a great historical growth trajectory. I don’t see that changing.
The company’s impressive cash flows from its Burger King, Popeyes Louisiana Kitchen, and Tim Hortons banners have provided for impressive growth as well as dividend payouts over time. Investors in QSR stock are currently rewarded with a yield of 3.4%. That’s pretty darn good for a company of this quality.
I’m of the view that Restaurant Brands stock is undervalued and shouldn’t have a yield this high. Furthermore, I’m bullish on this company’s growth prospects in emerging markets, particularly Asia.
These factors put Restaurant Brands high on my list of stocks to watch for growth investors.
Another growth stock that many investors may not call a growth stock is Spin Master (TSX:TOY). This toy maker has transformed itself into an IP and licensing machine. Via Spin Master’s digital gaming segment, investors have benefited from sector-beating growth rates and an outlook in this regard that is unmatched.
In my view, Spin Master represents the “new world” of children’s entertainment companies. The company’s business model has shifted in the right direction and is set for success long term.
Investors looking at Spin Master’s chart will notice some pretty incredible momentum of late. Indeed, volatility has been a core facet of this stock in the past. However, for those who can hold through some volatility, this is a stock that could outperform long term.
Indeed, this e-commerce behemoth continues to outshine the competition, providing world-class growth rates. This level of growth is hard to come by, and Shopify has always found a way to surprise to the upside during earnings season.
With the pandemic winding down, there are some concerns about growth slowing. However, I think taking a very long view of the catalysts underpinning Shopify highlights the value this stock brings to the growth stock discussion.
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Fool contributor Chris MacDonald has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Shopify and Spin Master Corp. The Motley Fool recommends Restaurant Brands International Inc. and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.