As a young investor, you can afford to take more risks than an older investor who is nearing retirement. But that doesn’t mean you should be reckless and invest in speculative stocks with the hope of doubling your money over a short period of time.
Sure, you can increase your long-term returns by investing in “riskier” growth stocks, but let’s be realistic. You’re probably not going to double your money in a short time frame. You should always consider the value that you’ll receive relative to the amount of growth in order to maximize your returns.
Slow and steady income stocks are nice to have, but as a young investor, you probably don’t need to income for today. So, growth stocks with little or no dividends are probably better to have as core holdings as you focus on capital appreciation.
Here are two great Canadian growth stocks that I believe every young investor should consider adding to their portfolio.
Alimentation Couche Tard Inc. (TSX:ATD.B)
Alimentation Couche Tard is a fantastic growth-by-acquisition story that is far from over. The management team is top-notch and focused on delivering long-term value to shareholders through strategic acquisitions that offer synergy opportunities.
Couche Tard is an incredibly efficient convenience store operator that is working on consolidating a very fragmented market. I believe the sky is the limit when it comes to growth prospects, and the management team’s proven growth-by-acquisition strategy will pay huge dividends to shareholders over the long run — figuratively and literally.
Couche Tard trades at a 22.9 price-to-earnings multiple, which may seem pricey for a convenience store operator, but it’s actually a bargain when you consider the amount of earnings growth the company will realize over the next few years.
Restaurant Brands is the juggernaut behind the incredible brands in Tim Hortons, Burger King, and Popeyes Louisiana Kitchen. The management team in 3G Capital is a global expansion specialist that takes cost-cutting initiatives to the extreme.
The recent Popeyes Louisiana Kitchen acquisition puts Restaurant Brands on the map in the fried-chicken market, which is the place you want to be in the fast-food industry if you want top-tier growth. Chicken accounts for approximately 10% of the fast-food market, and there’s no doubt that Restaurant Brands is going to see a huge amount of earnings growth as it brings Popeyes chains to the rest of the world.
The stock has had an incredible upward run over the past year, but I still think the stock is a great long-term growth play. I believe the incredible management team is worth every penny of the premium valuation.
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share. Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune. Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
Fool contributor Joey Frenette owns shares of Restaurant Brands International Inc. and Alimentation Couche Tard Inc. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC. Alimentation Couche Tard Inc. is a recommendation of Stock Advisor Canada.