If you’re interested in building sustainable wealth, then the stock market is the way to go. Over the long term, no other asset class has been able to beat stocks in terms of returns. Although some investors may be able to get lucky and buy a stock that skyrockets in value over a short period, that’s not really the norm. Investors should get into the habit of identifying companies with long-term potential, buying shares, and holding for years.
In this article, I’ll discuss three stocks that you should invest in for the next five years!
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This is still a top stock
If I could only invest in one TSX stock for the next five years, it would be Shopify (TSX: SHOP)(NYSE:SHOP). Shopify has gone from one of the most loved Canadian stocks to one of the most criticized. In fairness, I think that investors should criticize any stock that falls more than 70% from its all-time highs. However, one the on hand, you could probably argue that Shopify never should’ve been as highly valued as it was. In my opinion, this is a more reasonable valuation for the company. I think we could see those higher valuations again in the future.
The fact of the matter is that Shopify remains one of the biggest players in an important and emerging industry. In its latest earnings presentation, Shopify reported that it still held onto the second-largest share of the American e-commerce industry. To put that into perspective, that’s the second-largest e-commerce market in the world. As Shopify continues to expand its partnership network, it’ll become very hard for consumers to purchase merchandise on stores not powered by this company.
A mid-cap stock you should buy today
If you’re in the market for small- or mid-cap stocks, then consider investing in Topicus.com (TSXV: TOI). Of all the mid-cap stocks on the TSX, this company excites me the most. The reason I find Topicus so appealing may be due to its close relationship with Constellation Software. If you’re a seasoned Canadian investor, you may know that Constellation Software is one of the most successful Canadian tech stocks in history. The fact that Topicus is able to work very closely with a company of Constellation’s calibre is very advantageous.
Six members of Topicus’s board of directors are executives with ties to Constellation Software. That includes Constellation’s founder and president Mark Leonard. If Topicus is able to take advantage of the wealth of experience provided by its board, then it could avoid many of the mistakes that hinder smaller companies from growing. I strongly believe that Topicus could be one of the next great Canadian stocks.
Here’s a stock for more conservative investors
I recognize that the first two stocks appeal more to growth investors. That’s probably expected given that I’m a growth investor myself. However, I recognize that there are many investors out there that aren’t. That’s why I have the perfect stock for those individuals. If you’re looking for a stock that could be less risky, while still providing a decent amount of growth potential, then consider Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM).
With a portfolio of about US$725 billion of assets under management, this is one of the largest alternative asset management firms in the world. Through its subsidiaries, Brookfield has exposure to the infrastructure, insurance, real estate, renewable utility, and private equity markets. Over the past four years, Brookfield’s portfolio has exhibited a CAGR of 26%, helping drive the company’s stock.
As a cherry on top of all that growth, Brookfield is listed as a Canadian Dividend Aristocrat. It has increased its distribution in each of the past nine years.
