Many investors have benefited from finding the highest-growth stocks in the market and buying them over the past decade. However, the search for a top growth stock to add to one’s portfolio today has gotten a lot more difficult. That’s because growth, in general, is on the decline right now.
A number of factors are responsible for this. Surging inflation has increased expectations that interest rates are about to rise. In such an environment, growth stocks tend to underperform. That’s because future earnings are discounted at a higher rate. And because most growth stocks earn most of their income in years further out, this is detrimental to these companies’ valuations.
However, there are unique opportunities in the market investors should consider. Here’s why I think Docebo (TSX:DCBO)(NASDAQ:DCBO) is a growth stock worth diving into right now.
A growth stock supported by strong secular catalysts Docebo is a Canadian software company that sells a cloud-based LMS (Learning Management Systems) product. This platform helps organizations manage and track customer and employee training data. In short, Docebo ticks all the boxes for software growth.
Indeed, those bullish on the strong secular tailwinds behind the software space have been well rewarded over the long term. Docebo’s unique niche positioning in this market is worth considering. The company’s focus on the enterprise software market has held up well in comparison to its consumer-focused internet peers.
Additionally, Docebo boasts very strong renewal rates. The company’s margins are enticing. Overall, Docebo provides a best-of-breed software option for investors looking for a top-tier growth stock.
Now, Docebo has been reinvesting heavily into its core business. Accordingly, earnings may take time to rise over time. That said, I expect Docebo’s fundamentals to continue to improve in a slow and steady fashion. Right now, that may be viewed positively by the market.
Recognized as a Core Leader for the fifth year consecutively Recently, the Fosway Group named Docebo as a Core Leader on the 2022 Fosway 9-Grid for Learning Systems.
Fosway Group is the number one HR industry analyst of Europe, and its 9-Grid model has been evolving since 2008. This model acts as a market analysis tool that assists enterprise learning professionals in the identification of total ownership cost, comparative potential, market presence of multiple solutions and performance to make informed decisions around their solution requirements.
This was the fifth consecutive year for Docebo to get recognized as a Core Leader. And the vice-president of sales attributed this to the company’s commitment to offering its European and United Kingdom customers maximum business impact via learning.
Also, it’s worth noting that Docebo keeps expanding its EMEA footprint. In the third quarter, Docebo saw its existing European network of operations growing with the addition of a new office in Munich, Germany. Those looking for reasons to buy Docebo stock certainly are not short on ideas right now.
Bottom line Docebo’s impressive growth profile is noteworthy. This company has a strong presence in Europe and globally, with an excellent outlook moving forward.
Yes, valuations could continue to get compressed from here. However, those thinking long term may like how Docebo is positioned right now. This is a growth stock worth considering at these levels.
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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Docebo Inc.