A Growth & Innovation Story

Initiating Coverage on Three Canadian Growth Companies.

Martin Toner, CFA

We introduce our Growth & Innovation coverage and initiate on three Canadian growth companies. Technology-enabled change is having a profound impact on equity markets globally, including the S&P/TSX Composite. The drivers of equity returns for Canadian Indexes are beginning to change and our view is that it will continue. Innovative, high growth companies are a larger part of the index and more companies being added could radically remake the S&P/TSX Composite. The information technology (IT) sector has gone from a 2% weight of the S&P/TSX Composite to 10% over the last five years and we believe it can go to 20%. We make a case for investing time, energy and resources into understanding a new source of value for Canadian investors. We do not view this change as zero-sum, rather far from it. While some companies are “disrupted” in aggregate, we believe the impact of technology-enabled change is strongly a net positive. Innovators, like Shopify, enable the creation of businesses that would not have existed otherwise, and while there are limits to growth of large parts of the economy, like retail spending, we believe innovations like e-commerce platforms create growth in GDP rather than redistribute it. The fundamentals of the innovation economy remain strong globally and are encouraging in Canada. Venture capital activity in Canada is growing at a rapid pace, and we see positive momentum at the grass roots level with growth stage companies and in the IPO market. 


  • Shopify: Shopify continues to gain share in a large and growing market and innovates to the benefit of merchants, while providing economics to Shopify. We believe its vast ecosystem is difficult to compete with, enables the Company to out innovate competition, and creates an effective moat going forward. We believe Shopify will become highly profitable over time.
  • Lightspeed: We view Lightspeed as one of a select group of software companies whose integrated approach have entrenched it into a valuable strategic position allowing them to earn both subscription and payments revenue and likely revenue from additional services over time.
  • Real Matters: We believe Real Matters is well positioned as the residential real estate transaction process further digitizes. We believe share gains will drive revenue growth and Real Matters will create shareholder value by successfully monetizing the Company’s data assets. 
Martin Toner, CFA 647-776-8241

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