“First in and last out.” Those are words that all investors should live by. This way of thinking states that you should aim to be in most of your positions before the rest of the crowd and that you aim to exit long after everyone else. There’s good reason for this, the biggest being that in both scenarios, very few people are talking about the stock. On the buying side, the price hasn’t been pumped by large numbers of investors. On the sell end, you’ve given the stock a much longer time horizon to grow.
In this article, I will discuss three stocks that aren’t being talked about by many investors. Starting positions in these three companies today could pay off immensely in the long run.
One of the most reliable compounders in Canada
Reliability is one trait that investors love to seek out but one that many hate admitting to admiring. Often, this implies that the company isn’t in a high-growth stage. However, your entire portfolio doesn’t need to be that aggressive. By incorporating some of these reliable compound machines, your returns can still outperform over the long run.
Fortis (TSX:FTS)(NYSE:FTS) is one of the most reliable compounders in Canada. Dividends included, the stock has gained about 2,170% since its IPO. This represents a 13% gain on an annualized basis. This compares to an annual return of 5.6% by the TSX over the same period. Fortis also holds one of the longest active dividend-growth streaks. With 47 consecutive years of dividend raises under its belt, very few companies can challenge its presence in that regard.
This stock’s latest announcement seems to have been largely ignored
Over the weekend, Canadian Pacific Railway (TSX:CP)(NYSE:CP) announced that it would be acquiring Kansas City Southern. As a result, its rail network will be the first in history to run from Canada to the United States to Mexico. This is massive for the company, as it expands its reach tremendously. Last August, Canadian Pacific also announced its acquisition of the Central Maine and Quebec railway, giving the company access to the Atlantic region.
Year to date, Canadian Pacific has returned just over 1%. However, its past-year performance has been a gain of nearly 50%. In addition to its excellent price appreciation, Canadian Pacific is an outstanding dividend company. With a current dividend yield of 19.8%, the company is in great position to keep raising dividends for years to come.
A top growth stock that hasn’t been hit by the correction
It’s no secret that tech stocks have been punished hard by the stock market recently. Companies like Shopify (-10%), Docebo (-10%), and Lightspeed (-12%) have dropped big over the past month. However, over that same period, Constellation Software (TSX:CSU) is up about 4%. Yet, investors seem to be ignoring this sector-leading performance.
Constellation Software is a consolidator of small businesses. In short, its management seeks to acquire technology companies across many verticals and incorporates them into the Constellation network. The company’s strategy has turned out so well that its CEO, Mark Leonard, has needed to be wary of copycat companies. Constellation is a company that aspires to continue growing over the long term, and its recent outperformance should sway more investors than it has.
Interested in 10 more stocks that would also make great investments today? Take a look at this...
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
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 Jed Lloren owns shares of Docebo Inc. and Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Constellation Software, Shopify, and Shopify. The Motley Fool owns shares of Lightspeed POS Inc. The Motley Fool recommends FORTIS INC.