As an investor, you should look to buy stocks of businesses that you believe will generate the best results relative to the risks you’ll take on over the long term. By long-term, I mean over at least five years. Ideally, one should shoot to hold onto a stock of a company they truly believe in for decades at a time.
Undoubtedly, it’s hard to hang onto a name for 10 or 20 years, given that an investment thesis can change with time. Regardless, the longer one extends their holding period, the lower their chances of losing money and the greater their chances of achieving truly life-changing levels of wealth creation.
Compounding can work wonders on top TSX stocks held over decades
Remember, compounding doesn’t work its magic over the course of months, quarters, or even years! For full effect, it can take decades, and the longer one leverages time, the more potent the effects of compounding will be. Indeed, Warren Buffett proves that compounding and sound long-term investment is the key to generating next-level wealth, not trading in and out of securities or assets deemed as “sexy” at any given time.
These days, cryptocurrencies and non-fungible tokens (NFTs) fare all the rage. While speculative instruments may help one score a big gain over a concise time span, the magnitude of risk borne by investors is unfathomably tricky to gauge. As such, most shouldn’t attempt to get into such assets that could soar or implode throughout a weekend. Instead, wonderful businesses well-equipped to gain over the long term are a much better use of one’s funds.
While it’s OK to speculate with the disposable income you’re willing to lose, betting more than one is comfortable parting with could lead to disastrous results, as one will be more likely to sell, not buy, at a loss once the tides inevitably turn on high-momentum assets like Bitcoin.
Right now, Docebo (TSX:DCBO)(NYSE:DCBO) and Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) strike me as compelling, albeit pricey stocks that may be worth nibbling on right here. They’ve been on quite a run, but they look well-geared to continue thriving in their respective high-growth markets over the coming decades.
Docebo is one of the best Canadian ways to play the digital transformation. Many workers have no desire to return to the office, and other firms are more inclined to adopt a hybrid work-from-anywhere model permanently. Indeed, as the pandemic lingers through 2022, many more workers and employers will continue warming up and embracing the hybrid model. Technology companies like Docebo that ease the productivity loss of working from home are well-geared to continue powering higher on the trend.
As a learning management system (LMS) company that’s won big-name clients in 2020, it would be a mistake to count the firm out just because of its modest market cap. If anything, the mere $3.3 billion market cap signifies the stock has much room to run over the next decade.
Lightspeed Commerce stock now finds itself recovering after a short-seller report that targeted the firm over a wide range of claims. Many investors sold on the news, but it’s possible that they sold too soon and that short-sellers are wrong to question LSPD as it continues growing. Now, accounting issues are more than enough reason to sell. But until there’s more evidence of wrongdoing, investors willing to give Lightspeed the benefit of the doubt may be in for colossal upside should the company move on.
If you believe in Dax Da Silva and his team, the recent short-driven dip may prove to be a tremendous buying opportunity as the e-commerce company looks to continue its incredible growth. Personally, I’d be cautious with the name, but if you think the shorts are wrong, as they tend to be with Canadian companies they target, LSPD may very well be a steal at around $120.