Most of us would wish to retire as millionaires. Meanwhile, it is not such a difficult task, provided we start investing early in our careers to harness the power of compounding. Let’s assume that you are currently 25 years old and plans to retire by 55 years. An investment of $500 per month grown at a 10% per annum could create a fortune of over $1 million by the time of your retirement. You need to make these investments through your TFSA to shield your earnings from tax deductions.
If you are ready to invest, here are the three companies that have the potential to deliver an average return of over 10% for long periods.
Lightspeed POS
The pandemic has hastened the digitization process, with many small- and medium-scale businesses looking at increasing their digital presence to drive growth. This secular shift has increased the demand for Lightspeed POS’s (TSX: LSPD)(NYSE: LSPD) products and services.
The point-of-sale and e-commerce software solutions provider is still in the growth phase, with its customer base standing at 140,000 at the end of the March-ending quarter. AMI Partners projects a total of 47 million retailers and restaurants operating globally right now, which are the company’s potential customers. So, Lightspeed POS has significant scope for expansion. Its product expansion, high customer retention, up-selling opportunities, geographic expansion, and higher recurring revenue bode well with its growth prospects.
Apart from organic expansion, Lightspeed POS also relies on strategic acquisitions to expand its footprint and strengthen its market share in specific markets. Over the previous few months, the company has completed Upserve, ShopKeep, and Vend acquisitions. With its cash and cash equivalents standing at $807.2 million, it is in an excellent position to carry out future acquisitions. So, Lightspeed POS would be a perfect long-term bet.
Cargojet
Cargojet (TSX: CJT) is one of the top performers over the last five years, with its stock price increasing about 471.8% at a CAGR of 41.7%, comfortably outperforming the broader equity markets. Meanwhile, I believe the uptrend in its stock price could continue for many more years, given the favourable industry trend and its expansion plans.
The secular shift towards online growth has created a long-term growth potential for Cargojet. Further, the company earns around 75% of its revenue through long-term contracts, shielding its financials from price and volume fluctuations. Given its array of 28 aircraft and overnight delivery services to major cities in Canada, the company enjoys a significant competitive advantage over its peers.
The company plans to add five new Boeing 767 freighters to its fleet over the next two years, expanding its network in both domestic and international markets. Further, its network optimization and cost-management initiatives could improve its margins, and, in turn, boost its stock price.
goeasy
My final pick would be goeasy (TSX: GSY), which has delivered an impressive 3,890% returns over the last 20 years at a CAGR of 34.8% on the back of its strong fundamentals. The sub-prime lender’s top line and net profits have grown at a CAGR of 13% and 29% during this period, respectively. Despite the strong growth, the company has acquired just 3% of its addressable market, presenting an excellent scope for expansion.
Meanwhile, the company is expanding its product offering, venturing into new territory, expanding its distribution channels, and investing in technology to improve customer experience to increase its market share. Further, through its recent acquisition of LendCare Holdings, the company has also entered into the sizeable non-prime lending market. So, the company’s long-term growth prospects look healthy.
