Investing in stocks is one of your best bets for building wealth over the long term. For short-term goals, where you’ll need to access your funds within a year or two, you’re better off in a standard high-interest savings account. But if you have a time horizon of five years or more, owning TSX stocks is a no-brainer.
Building a portfolio of individual stocks takes time, and there’s no need to rush. If you’d prefer, you could begin by buying a few broad market index funds to provide your portfolio with the much-needed diversification. From there, you can begin buying shares of individual TSX stocks.
When I’m researching companies that I plan on holding for the next decade and longer, I’m looking for businesses that have long-term growth potential. In addition to the company’s growth potential, I’m also looking for sectors that are riding strong tailwinds.
To help get your portfolio started, here are two top TSX stocks that are perfect for any long-term investor. Both companies have impressive market-beating track records that I don’t see ending anytime soon.
Brookfield Asset Management
Broad market index funds are a great place to start for new investors, because they provide exposure to a wide range of different sectors in the market. Typically, individual stocks specialize in a specific area of the market, which gives investors a chance to outperform the broader market. On the flip side, you also have the risk to underperform the market’s returns.
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) stock is as close as you’ll get to a broad market index fund. The $95 billion asset management company not only has investments spread across a range of industries, but it has an international presence too.
The company’s healthy balance sheet allows it to invest in businesses where it believes it can generate long-term wealth for its shareholders.
Shares of the TSX stock are up 100% over the past five years. In comparison, the S&P/TSX Composite Index is up just 40%.
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Now that it’s valued at a market cap of $185 billion, I wouldn’t expect that type of growth to continue. That being said, I certainly wouldn’t bet against this TSX stock to deliver market-beating growth over the next decade.
The e-commerce giant had an incredible year in 2020, as the pandemic led to a surge in online shopping. The company managed to end its 2020 fiscal year with back-to-back quarters of revenue growth of nearly 100%. Growth has even accelerated in 2021. The company posted year-over-year quarterly revenue growth of 110% in its first quarter.
Many investors knock the tech stock for its outrageous price — not its $1,500 share price, but its valuation. It’s trading today at a price-to-sales ratio above 50. That’s high enough for many investors to not come anywhere near Shopify stock.
I wouldn’t suggest owning a portfolio full of companies trading at this type of valuation. But if you’re looking to add a high-growth company to your portfolio and can handle the likely volatility, this is one stock that I’m more than comfortable taking a chance on.
If you’re on the fence about adding the growth stock to your portfolio, you may want to act fast. Shares are down just about 20% from where it was earlier this year, and I don’t think it will be long before the stock is back to setting new all-time highs.
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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 Nicholas Dobroruka owns shares of Shopify. The Motley Fool owns shares of and recommends Brookfield Asset Management and Shopify. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV and recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.