Investing is an excellent way to grow wealth over the long term and achieve one’s financial goals. However, history shows that having a solid mix of growth and value in one’s portfolio can provide a more balanced long-term trajectory.

I’m a value guy, myself. However, there are a few growth stocks I think fit within the “growth at a reasonable price” category. And Constellation Software (TSX:CSU) is certainly one of these companies.

Let’s dive into why this is the case, particularly for those who may be worried about the company’s valuation multiple of more than 100 times earnings.

Constellation Software: A high-conviction, long-term stock

What’s interesting about Constellation’s shareholder base is how patient so many investors have been with this stock. Constellation’s business model of consolidating the mid-cap tech space is one that’s produced tremendous long-term value. This is a company with a world-class management team that knows what it’s doing.

Accordingly, from a return on invested capital perspective, Constellation Software is one of the best in the business. As the company gets larger, its growth is likely to slow. However, of late, Constellation has maintained an impressive growth rate due to the company’s roll-up strategy that works.

Given the long-term growth potential of this space, I think Constellation’s valuation makes sense. Unlike other high-flying tech stocks that have traded at 100 times sales, a 100 times earnings valuation for a company like Constellation that compounds its cash flow over time makes sense.

This is a company that’s never been cheap. And that’s for a reason.

Bottom line

It’s truly difficult to wrap one’s head around the idea that a company trading at a triple-digit price-to-earnings multiple could be considered “value.” However, it’s also worth noting that Constellation has traded at much higher multiples in the past. In many respects, this company has grown into its valuation.

That said, can Constellation keep the momentum up? That’s the key question many investors may be asking. I think the answer is yes, given the immense opportunity available to Constellation right now. Indeed, it’s estimated that there are more than 10,000 companies in Constellation’s wheelhouse that could be acquired. That’s some significant fodder for growth in the years to come.

Ultimately, every investment involves some level of risk. For Constellation Software, this risk mostly comes from the potential for slowing growth. I think that risk is worth the long-term reward for investors looking for a growth at a reasonably priced stock.

The post Constellation Software: A Growth Gem at a Valuation Worth Considering appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software.