For many investors, the word tenbagger represents the holy grail of stock picking.
By increasing the value of your investments 10 fold, you can build considerable wealth with only a little bit of money invested. And if you achieve a tenbagger over a short time frame, the boost to your wealth can be truly extraordinary.
Over 40 years, you can reasonably expect a diversified portfolio of stocks to rise 1000%. But if you achieve that kind of return in, say, three years, that’s really something.
Believe it or not, a few Canadian stocks that have managed to do just that — a select handful of companies that have risen 1000% or more in a short time frame. By investing in these stocks, you could have turned $10,000 into $100,000 or more in under a decade. The following are just three of the most notable.
Constellation Software
Constellation Software (TSX:CSU) is a software company founded by legendary venture capitalist Mark Leonard. The company is unique in the tech industry in that it doesn’t aim to acquire a huge market share in a large vertical, but rather to grow by acquiring proven companies in relatively small niches.
Many of Constellation’s acquisitions have been fairly small ($5 million or less), but the company has a knack for finding tech investments that are actually profitable. This is in contrast to the Silicon Valley practise of funneling untold millions into companies that may take over a decade to become profitable.
Constellation’s strategy is simple: acquire successful companies in well-defined software niches for which there is a ready market and grow them over time.
It’s the exact opposite of the VC hype train that’s become all too common in tech. But it’s undeniably been successful: if you’d bought CSU shares on January 8, 2010, you’d be up over 3,800% today.
Air Canada
Air Canada (TSX:AC)(TSX:AC.B) does not fit the typical profile of a tenbagger stock. As the nation’s largest airline, it has the kind of big, established company reputation normally associated with slow and steady returns.
But looks can be deceiving.
In the 2000s, in order to ward off a hostile takeover, Air Canada deliberately loaded itself up with debt and made itself unattractive. Its stock tanked and it faced bankruptcy. In the ensuring years, the company began a dramatic ascent.
In 2012, Air Canada achieved an after-tax profit following years of losses. Also in 2012, its stock predictably started rising. If you’d bought Air Canada stock at some of its lowest prices that year and held to today, you’d be up over 5000%.
Shopify
Shopify Inc (TSX:SHOP)(NYSE:SHOP) has been one of Canada’s biggest IPO success stories of the past decade.
It closed at $34.9 on its first day of trading and is now worth $560–an incredible 1,500% rise in just three years.
Shopify has been one of the most publicized growth stories in Canada since going public. In a period where Canadian markets have lagged behind their American counterparts, SHOP has proven that we can produce the occasional tech superstar whose returns rival the Silicon Valley giants.
For Shopify, the only question is how much further it can go.
The company’s stock has gotten extraordinarily expensive and its revenue growth has begun to decelerate. While these trends might seem ominous, remember that Amazon kept rising for decades at nosebleed valuations and only occasional profits.
