The Motley Fool

3 Canadian Stocks to Buy and Hold for Next 5 Years

Image source: Getty Images

Investors can accumulate significant fortunes over a long period provided they are disciplined enough to be invested over the long term to harness the power of compounding. Investing over a long period shields your investments from short-term fluctuations while maximizing the returns. Meanwhile, selecting stocks with high-growth potentials is also equally important. Here are three such Canadian stocks you can buy right now.

goeasy

goeasy (TSX:GSY), which provides financial services to sub-prime customers, has comfortably outperformed the broader equity markets over the last five years by delivering over 410% returns. Meanwhile, the rally is not over yet and can continue its growth for several more years, given the underpenetrated sub-prime market and economic expansion.

Meanwhile, new product launches, penetration into newer markets, and an omnichannel business model augurs well with its growth prospects. The company’s management expects its revenue to grow by double digits over the next three years, while its return on equity could increase at a rate of over 25%, which is encouraging. Meanwhile, the company also pays quarterly dividends, with its forward yield standing at 2%, which is on the lower side. However, it has increased its dividends at a CAGR of 34% since 2014. So, investors can expect the company’s yield to improve in the coming years.

Canopy Growth

With an increasing number of countries warming up to cannabis usage, the sector offers high-growth prospects. Research and Markets expects the global cannabis market to grow at a CAGR of 28% over the next six years. Amid the sector’s high growth prospects, I have selected Canopy Growth (TSX:WEED)(NYSE:CGC) as my second pick.

It is one of the financially strong cannabis companies, with its cash and cash equivalents standing at $1.59 billion as of December 31. So, the company is well positioned to fund its growth initiatives. The company has acquired a significant market share in the cannabis-infused beverage segment, which offers strong growth prospects.

Meanwhile, Canopy Growth is also expanding its product offerings to strengthen its market share in the Canadian recreational cannabis market. In the United States, the company focuses on growing its strategic business units and building infrastructure to increase its footprint. Also, Canopy Growth owns warrants to acquire Acreage Holdings as soon as the federal government legalizes cannabis. So, given its growth prospects, healthy liquidity position, and sectoral tailwind, I believe Canopy Growth could deliver substantial returns over the next five years.

Lightspeed POS

Many small- and medium-scale businesses have shifted to omnichannel solutions amid the pandemic. Along with this shift, increased adoption of online shopping has created a multi-year growth potential for Lightspeed POS (TSX:LSPD)(NYSE:LSPD). Given its large customer base and innovative products, the company is well positioned to benefit from the expanding addressable market. Its high customer retention and growing average revenue per user are encouraging.

Apart from organic growth, Lightspeed POS also focuses on acquisitions to strengthen its market share and penetrate newer markets. Over the last few months, it has completed the acquisition of ShopKeep and Upserve while working on completing the acquisition of Vend. Further, the company has recently raised around US$675 million, which could support its growth initiatives and future acquisitions. So, given the sectoral tailwind and its growth initiatives, I am bullish on Lightspeed POS.

For similar wealth-creating ideas, check out the following report.

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

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 Lightspeed POS Inc. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.