3 Top Growth Stocks to Buy and Hold

Are you looking for growth stocks to buy and hold? If so, Waste Connections Inc. (TSX:WCN)(NYSE:WCN) and two other stocks should please you.

| More on:

Are you afraid to invest in growth stocks because you think that they’re very risky? While every stock is somewhat risky, there are growth stocks in the Canadian market that have produced superior returns over a long period while being not too risky that are also reasonably priced.

I suggest you three growth stocks that meet those criteria: Constellation Software (TSX:CSU), Waste Connections (TSX:WCN)(NYSE:WCN), and CCL Industries (TSX:CCL.B).

Constellation Software

Constellation Software is an international provider of market-leading software and services to a number of industries, both in the public and private sectors.

Constellation was founded in 1995, and since then has grown fast through a combination of acquisitions and organic growth. It now has over 125,000 customers operating in over 100 countries around the world.

After years of fast growth, Constellation’s shares have risen to astronomic levels, reaching a price as high as $1,1134.30 on July 19. The stock’s compound annual growth rate of return (CAGR) over 10 years is 44%, which is very high.

However, while the year started strong for Constellation, its shares plunged by 13% in the last three months. The latest quarter has somewhat disappointed investors because revenue and profit growth were lower than expected.

Nevertheless, the software company still has high levels of growth left ahead, so I think the fall in Constellation’s price is an opportunity to buy shares at a more reasonable price. Its P/E has been high for many years, and is still high at 56.6, but its forward P/E is much lower at 23.3.

In addition, the company pays a quarterly dividend of US$1.00 per share for a yield of 0.41%.

Waste Connections

Waste Connections is an integrated solid waste services company that provides solid waste collection, transfer, disposal, and recycling services in mostly exclusive and secondary markets across the United States and Canada.

Waste Connections operates in an industry that seems boring, but it delivers steady, impressive results. Since going public on June 1, 2016, shares have risen by 75%.

The waste services company reported an adjusted profit of $0.65 per share in the second quarter – up 18.2% over the same period last year. Management rose its revenue, earnings, and free cash flow forecast for the year thanks to a positive start to the year and positive pricing trends in the solid waste segment.

The stock’s forward P/E is 21.2, which is reasonable for a growth stock.

In addition, Waste Connections pays a quarterly dividend of US$0.14 per share for a yield of 0.72%.

CCL Industries

CCL Industries is a global speciality packaging company and the largest label company in the world. It employs more than 20,000 people operating over 165 production facilities in 40 countries with corporate offices in Toronto and Framingham.

The stock performance is impressive, with a CAGR of 27% over 10 years. However, shares have plunged over 11% in the last three months. I think this represents an opportunity to buy this steady growth stock on the dip. CCL’s trailing P/E is currently 19.8, which is lower than its five-year average of 26.2. Its forward P/E is only 17.6.

CCL reported EPS of $0.69 and adjusted EPS of $0.70 in the second quarter – up 9.5% and 2.9%, respectively, from the same quarter a year earlier. Sales increased 0.9% to $1,264.4 million.

The company pays a quarterly dividend of $0.13 per share for a yield of 0.89%.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned.

More on Dividend Stocks

Retirees sip their morning coffee outside.
Dividend Stocks

Turn Your TFSA Into a Fund for a Comfortable Retirement

A calculated, well-disciplined, and smart approach to TFSA investing can help you turn the account into a way to fund…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Want Decades of Passive Income? 3 Stocks to Buy Now and Hold Forever

These TSX stocks have paid and increased their dividends for years and are well-positioned to pay higher dividends in future…

Read more »

hand stacks coins
Dividend Stocks

How to Allocate $30,000 for Both Current Income and Future Growth

Are you wondering how to earn income and grow your capital (at the same time)? These three quality TSX stocks…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Need $1,000 Each Month? How Much You Need to Invest in a TFSA

Want income and growth? Then consider these three options analysts continue to drool over.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

Why Putting $7,000 in These Dividend Stocks Makes Sense for Your TFSA

These stocks offer high yields and have increased dividends annually for decades.

Read more »

Dividend Stocks

5 Canadian Dividend Stocks I’d Buy Now and Hold for the Next 20 Years

Got $10,000? Here's the best way to create a dividend income portfolio that will last at least two decades.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

The Best Approach for Your $7,000 TFSA Contribution This Year

This TFSA strategy can reduce risk while providing decent returns.

Read more »

sale discount best price
Dividend Stocks

1 Delicious Dividend Stock Down 24% to Buy and Hold Now

Are you looking for security for the next few years at least? Then this dividend stock could be for you.

Read more »