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3 Top TSX Stocks That Have Gained Up to 3,500% in the Last Decade

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Growth stocks continue to be an ideal bet for investors with a large appetite for risk. Despite their high volatility, growth stocks can generate significant wealth over the long term.

Here we look at the three top-performing Canadian stocks that have crushed market returns in the last 10 years.

Constellation Software

Shares of Canada’s top tech company, Constellation Software (TSX:CSU) have returned about 3,500% in the last 10 years. If you had invested $1,000 in this stock in February 2010, it would have ballooned to $35,000 today.

CSU stock is trading at $1,406, which is just 8% below its record high. In the last 12 months, the stock has returned 28% compared to the S&P 500 gains of 19.4%. CSU’s stellar run has meant that the stock is trading at a high price-to-earnings multiple of 38.6. By comparison, analysts expect company earnings to rise at an annual rate of 19.2% in the next five years.

Constellation Software primarily acquires, manages and builds vertical market software businesses.  The company was founded in 1995. It has sought to acquire niche software products that are used by customers for mission-critical processes and that have limited competition. This model ensures high switching costs for customers, resulting in a high retention rate and a stable stream of recurring revenue.

CSU has a market cap of close to $30 billion with significant upside potential for long-term investors.

Air Canada

Shares of Canada’s top airline company, Air Canada (TSX:AC)(TSX:AC.B) have returned about 2,550% in the last 10 years. If you had invested $1,000 in this stock in February 2010, your investment would be worth $25,550 today.

Air Canada is a domestic, United States trans-border and international airline company. It provides scheduled passenger services in domestic and international markets to and from Canada.

The company has a global network providing scheduled passenger service to 62 Canadian airports, 53 U.S. airports and over 100 international airports.

Since the start of 2020, Air Canada stock has lost 20% in market value driven by the coronavirus impact on company sales. We have seen that Cowen, a leading investment bank, recently identified Air Canada stock as a risky investment due to its exposure to China and other Asian countries.

The pullback in Air Canada stock has meant that it is trading at a cheap valuation. It has a forward price-to-earnings multiple of 6.8 and a five-year estimated PEG ratio of 0.24. The company’s price-to-sales ratio is 0.55, while the enterprise value to revenue ratio is 0.76.

Aurora Cannabis

Shares of Canada’s billion-dollar pot stock Aurora Cannabis (TSX:ACB)(NYSE:ACB) have returned close to 2,000% in the past 10 years. Yes, a stock that has lost 85% in market value in the last year has multiplied your wealth 20 times in the last 10 years, which means Aurora Cannabis shares returned 13,500% between February 2010 and March 2019.

Aurora Cannabis and peers have been impacted by several structural issues in the last 15 months. First investors were rightly concerned over the company’s sky-high valuation; soon after, recreational cannabis was legalized in Canada in October 2018.

Despite the legalization, the slower-than-expected rollout of cannabis retail stores resulted in a tepid top-line growth for most cannabis stocks.

The illegal market, regulatory issues, vaping scandal, high inventory levels and rising costs have resulted in an extended bear market for pot stocks.

Though the total addressable market for cannabis market continues to grow at a fast pace, investors can expect volatility in the short term.

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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.

The Motley Fool owns shares of and recommends Constellation Software. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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