Since going public in mid-2015, e-commerce platform developer Shopify (NYSE:SHOP) has nearly quintupled in value, for around a 60% annual compounded growth rate. Of course, predicting those kinds of returns is impossible, but Shopify’s business model represents a unique opportunity that hit the market at just the right time.
Yet Shopify isn’t the only business with compelling arguments in its favor. We asked three of our Motley Fool investors for growth stocks that they like that have the potential to post returns that would put Shopify’s own to shame.
Top 10 Canadian Stocks To Watch Right Now: DineEquity, Inc(DIN)
Dine Brands Global Inc (NYSE:DIN) owns or franchises more than 1,900 Applebee’s and nearly 1,800 International House of Pancakes (IHOP) restaurants throughout the country.
The full-service casual dining industry has come under pressure in recent years. More consumers are opting for quick-service restaurants, which typically offer lower prices, better food quality and shorter waits to support an on-the-go lifestyle.
Dine Brands Global saw its adjusted earnings per share decline by more than 30% in fiscal 2017, driven largely by a 5.3% decline in Applebee’s comparable same-restaurant sales.
This pressure ultimately caused the company to lower its dividend by 35% in February 2018 to free up cash for brand investments and support its stretched balance sheet.
Simply Safe Dividends had issued the company a Dividend Safety Score of 4 prior to the dividend cut announcement, signaling that the firm’s payout was potentially very unsafe.
While the new dividend amount appears to be more sustainable for now, the business remains under press. The stock’s new yield sits close to 3.6%, which isn’t very competitive with other income options given the payout’s weak growth potential going forward.
Top 10 Canadian Stocks To Watch Right Now: Google Inc.(GOOG)
Alphabet announced that it is fixing a latency issue that Google Home Max owners have been dealing with.
The tech giant announced that the smart home device will be receiving a performance update to ameliorate an audio latency issues by the end of the month, according to a report from The Next Web.
As things stand, when you play something through a speaker via Google Home Max’s 3.5mm port such as a record player, there’s a lag. This can be problematic when hooking up the device to a TV source, as the sound is sometimes out of sync with the picture.
Alphabet says the new update will fix this as it will reduce in-line delay from 550 to 39 milliseconds, which is a latency reduction of about 93%.
GOOGL stock gained 1.5% during regular trading hours but was flat after the bell, while GOOG shares gained 1.4% and fell 0.2% after hours.
Top 10 Canadian Stocks To Watch Right Now: Activision Blizzard, Inc(ATVI)
Activision Blizzard is well known for being a PC and console game company with games like Call of Duty and World of Warcraft. But I think the company is set up for long-term success because of its willingness to adapt to digital sales and early exploitation of esports. The company generated $7.02 billion in revenue last year and $2.21 per share in non-GAAP earnings in large part because of $5.43 billion of bookings from digital channels and we’re only now beginning to see the potential of esports.
DATA SOURCE: ATVI REVENUE (TTM) DATA BY YCHARTS.
What I want to highlight here is the power of esports in growing beyond the current gaming model. The Overwatch League is a model esports league with team owners like Robert Kraft (New England Patriots) and Stan Kroenke (Los Angeles Rams) and multi-million dollar advertising deals. If esports continues to grow and attract more viewers than NFL games, this could be a booming business long-term. Twitch TV has already agreed to a reported $90 million two-year deal to show Overwatch League on its streaming platform and advertising deals with HPand Intel are both reportedly worth $10 million-plus over a two-year period. The beauty of esports is that Overwatch League may be just the beginning. Activision Blizzard can replicate the success of one league with new games, effectively creating multiple sports leagues that it owns.
Between the organic growth in existing console, PC, and mobile platforms and the growth potential in esports, Activision Blizzard has a bright future for long-term investors.
Top 10 Canadian Stocks To Watch Right Now: Frontier Communications Corporation(FTR)
Frontier Communications Corp (NASDAQ:FTR) finally bit the bullet and completely suspended its dividend in February 2018. The company had a Dividend Safety Score of 1, signaling a very unsafe payout, from Simply Safe Dividends before its cut announcement was made.
Frontier has reported a net loss the last two fiscal years and is saddled with debt, in part due to its poor decision to acquire some of Verizon’s fiber assets in 2016 for $10 billion.
The firm’s weak financial position has made it very challenging for it to make the investments in its communications networks that are necessary to remain competitive.
When combined with Frontier’s large debt load, sizable dividend and ongoing customer losses, management’s decision to eliminate the payout isn’t a big surprise.