The TSX continues to trade at or near all-time highs. With the market heating up, investors may believe the time has passed to find Canadian stocks that offer growth or value.
However, if growth or value is truly your goal, you need to think long term. As Warren Buffett has said, you need to be able to hold a stock for 10 years, or else you shouldn’t even hold it for 10 minutes. So, this month, look at Canadian stocks offer value today and will give you returns even a decade from now.
A Canadian stock geared for growth
Investors looking for Canadian stocks may not have heard of SolGold Plc (TSX:SOLG), but it’s perfect for investors looking for strong growth at a reasonable price. The $1.1 billion gold, copper, and silver miner explores and mines around the world and looks to be on the verge of yet another acquisition.
Recent insider filings report that at the end of April, 1,008,565 shares were purchased by insiders with direct ownership of SolGold stock. According to reports, this is because the company is on the verge of another major acquisition. The company announced in the end of April that it would be looking to make a “significant investment into Ecuador and its mineral assets.” It looks like such an announcement will happen any day now, increasing SolGold stock’s hold as the largest and most active concession holder in Ecuador.
This recent news is bolstered by the fact that shares trade at 2.9 times book value, making it a solid value stock. Shares are up 14% in the last year, coming down as the price of gold slumped. But it looks like this is one of the Canadian stocks just starting to gear up.
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An economic rebound buy
Investors still fear that the continuing pandemic will affect their Canadian stocks. That’s certainly true now, but not forever. That’s why Alimentation Couche-Tard (TSX:ATD.B) is such a fantastic buy in May. An economic rebound means revenue should skyrocket as the world returns to normal. It has thousands of Circle K and gas retail locations across North America, and has been expanding around the world.
Yet the company remains well undervalued at 2.9 times book value and 0.8 times sales. That only looks to become more valuable as Alimentation continues to make more acquisitions. Insiders think so too, as the company continues to buy back its own stock at record levels. And this is the perfect long-term hold, with shares up 950% in the last decade for a compound annual growth rate (CAGR) of 26.5% in that time!
A recovery play among Canadian stocks
The company is swimming in $13 billion of debt, with a recent $5.9 billion government aid package delivered. Much of that is going to repay customers, so it might have investors thinking, “Why would I buy?” The answer is that most of that debt was taken on before the pandemic, so the company had a plan to pay it all back.
The plan was purchasing almost guaranteed cash cows. Air Canada stock bought fuel-efficient aircraft and its Aeroplan loyalty program. Now that the Transat A.T. deal has fallen through and Air Canada has gone into cargo, Air Canada stock has even more money to work with. So, when passengers are back at pre-pandemic levels, the company should have no trouble getting back in the black.
Let’s look at the bigger picture. The company’s CAGR for net income during the last five years has grown at a respectable 45%. While sales are down now, that won’t remain so forever. And at 1.5 times sales and 4.9 times book value, it looks like investors are really starting to catch on to Canadian stocks like this one.
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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.
Fool contributor Amy Legate-Wolfe owns shares of Air Canada. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.