While the macroeconomic environment remains weak, investors with a long-term mindset shouldn’t worry much and capitalize on the low prices of top Canadian stocks. Notably, the selling in equities amid fear of recession weighed on shares of even fundamentally strong companies, providing a solid opportunity for buying and holding these stocks for the long term.
If you can spare some cash, consider investing in shares of companies consistently delivering profitable growth. These companies are poised to outperform the broader markets by a wide margin and are more likely to deliver outsized returns. Against this background, let’s look at two stocks where you can confidently invest $2,500 in the long run.
goeasy (TSX:GSY) is a solid stock for buying at current levels and holding for a lifetime. It provides secured and unsecured loans to subprime consumers and has a market cap of about $2 billion. goeasy has grown rapidly over the past decade, while its stock delivered stellar returns and outperformed the benchmark index.
While goeasy has consistently grown its sales and earnings at a double-digit rate, what stands out is the stellar growth in the top and bottom lines amid a challenging macro environment in 2022. Impressively, goeasy’s revenues increased by 23% year over year in 2022. Moreover, its adjusted net income grew 10%, getting a boost from higher sales and solid credit and payments performance.
The company is well positioned to deliver double-digit sales and earnings growth in the coming years, reflecting continued growth in its consumer loan portfolio. goeasy expects its consumer loan portfolio to increase from $2.79 billion to $5 billion by 2025. The higher loan originations will likely lead to solid growth in its top line. Moreover, its steady credit performance and operating margin expansion will cushion its profitability.
Its comprehensive product base, new product launches, and omnichannel offerings will support the uptrend in its stock. Besides capital gains, investors will benefit from goeasy’s strong dividend payments. Its growing earnings base has enabled the company to increase its dividend in the past nine consecutive years. Further, due to the recent pullback in its price, it is trading at a forward price-to-earnings ratio of 8.9, which is below the pre-COVID levels and offers a solid entry point.
Along with goeasy, Aritzia (TSX:ATZ) is another stock with the potential to deliver multi-fold returns in the long term. This consumer discretionary stock has outperformed the TSX in the past five years, reflecting solid sales and earnings growth. While the macro environment remains weak, Aritzia’s revenues grew by 48.3% in nine months of fiscal 2023. During the same period, its adjusted earnings per share (EPS) increased by 22.7%.
Aritzia’s strong growth reflects the resiliency of its business model and the strong demand for its offerings. The company is projecting 15-17% average annual sales growth through 2027. At the same time, its EPS is expected to grow faster than its revenues.
Its solid mix of full-priced sales, the opening of new boutiques in the U.S., and strength in the e-commerce channel position it to deliver strong financials, which will likely drive its stock price higher.