After a strong start to the year, the Canadian stock market has re-entered a slump, suggesting a recession, or at least the possibility of it. As of this writing, the S&P/TSX Composite Index is up by 3.83% year to date.
While up year to date, the Canadian benchmark index has slipped by almost 3% since its January 2023 high. A downturn might make investors worry, it can be a good opportunity to invest in the stock market.
If you carefully identify and invest in high-quality stocks trading at discounted valuations, you can set yourself up for substantial wealth growth through long-term capital gains. To do this, it is essential to find stocks with the potential to deliver stellar returns. Buying and holding such assets in a Registered Retirement Savings Plan (RRSP) means you can enjoy tax-deferred returns on your investment.
For reliable long-term investments, what better to choose than industry-leading companies? Today, I will discuss three industry-leading stocks you can consider for your self-directed RRSP portfolio.
TFI International (TSX:TFII) is a $14.54 billion market capitalization Canadian transportation and logistics company. Headquartered in Montreal, it operates in Canada, the U.S., and Mexico through four business segments: package and courier, less-than-truckload, truckload, and logistics.
It generates most of its revenue through domestic operations, followed by the U.S. and Mexico. The stock offers you exposure to the growing transportation and logistics sector.
Market Research Future projects that the global freight and logistics market will deliver a compound annual growth rate of 4.3% between 2022 to 2030, making it a potentially lucrative space to invest in right now. The company’s latest quarter saw its operating income increase by 1% year over year.
At the same time, its adjusted earnings per share climbed by 10% and net cash from operating activities soared by 30%. As of this writing, the stock trades for $168.06 per share.
FirstService (TSX:FSV) is not technically a leader in the broader real estate industry. However, the $8.31 billion market capitalization real estate services company undoubtedly has carved out a comfortable place in the sector with plenty of potential to grow.
It offers essential real estate services and property management, leading the North American market as such a provider. Additionally, it relies mostly on its operations across the border in the U.S. for a large chunk of its revenue. While it has domestic operations, the U.S. market accounts for most of its balance sheet.
The supercharged bullish phase in the post-pandemic market saw some of the best time the stock had on the stock market. Since inception, it soared massively until the bull market made way to market volatility, and it slumped.
However, its leadership position in a large but fragmented market gives it plenty of opportunities to grow. It already increased sales from US$1.93 billion in 2018 to US$3.24 billion in 2021 through a strategically executed acquisition program. Listed only in 2015, it trades for $187.77 per share at writing, up by 452.26% from its inception, despite the 24.47% pullback from its December 2021 peak.
While StorageVault Canada (TSX:SVI) only boasts a $2.36 billion market capitalization, it is no small company. StorageVault engages in owning, operating, and leasing storage spaces to individual and commercial clients throughout Canada.
One of the largest companies in the Canadian storage space business, it has several brands under its banner. The niche market does not come into the limelight as often as other sectors, but it is a vital one.
StorageVault is no longer flying under the radar. Rather, it has soared. In the last five years, it is up by 156%. Interested investors can expect to see its final batch of fiscal 2022 earnings in March.
Its previous quarter saw the company report revenues of $69.3 million, up from $56.9 million in the same quarter last year. It is a solid business that finally seems to be getting the attention it deserves. If you’re looking for outsized gains potential for your RRSP, it can be an excellent stock to consider.
FirstService stock, StorageVault stock, and TFI International stock might not be industry leaders in the biggest sectors of the economy. However, all three are leading the charge in niche markets with immense growth potentials. Adding shares of the three TSX stocks to your RRSP can deliver outsized and tax-deferred returns to your portfolio.