You don’t need a lot of cash to build a diversified stock portfolio. $5,000 can be a great starting amount for a portfolio that generates and compounds a lot of wealth.
In fact, even with a relatively modest 7% average annual return, $5,000 could double into $10,000 in around 10 years.
Increase that average rate of return to 15%, and your $5,000 could double in five years. Here’s a quick five-stock portfolio that could give you a good chance of multiplying your wealth in around five years.
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An innovator in recreational vehicles
The first TSX stock to consider today is BRP (TSX: DOO) You may not recognize this name, but you will likely recognize its top brands like Ski-Doo, Sea-Doo, and Can-Am.
This $7.6 billion company has delivered around 14.4% compounded annual returns over the past five years. That is after the stock has fallen 8% over the past three months.
BRP operates in a cyclical industry, but its constant innovation and high-quality recreational vehicles have proved resilient. It generates a tonne of cash and has been very aggressive buying back stock (over 5% a year for the past five years). Today, you can pick up this stock for less than eight times 2023 earnings.
A cheap consolidator of energy services
TerraVest Industries (TSX: TVK) is another stock you have not likely heard of before. Yet over the past five years, this stock is up 167%. It has delivered a 23% compounded annual total return in that time.
TerraVest provides an array of products and services for the energy industry. You have to be comfortable to the company’s cyclical energy exposure. So far, it has been able to make cheap and very accretive acquisitions to offset the cyclicality. Despite its great track record of returns, this stock trades with a price-to-earnings (P/E) ratio less than 10.
A top retail stock
Aritzia (TSX: ATZ)stock has earned a 248% total return since 2018. That is a 28% compound annual growth rate (CAGR)! That is even with the stock pulling back 15% in the past three months.
Aritzia’s portfolio of “Everyday Luxury” brands have gained a following in Canada, which is starting to gain traction in the United States. Currently, America makes up around 50% of its revenues, but it could easily double or triple its store footprint there.
With this stock, you get a great balance sheet, a highly profitable brand, an aligned executive team, and the potential for substantial growth from U.S. and potential international expansions.
A leading convenience provider
Alimentation Couche Tard (TSX: ATD) has been a very steady performer for Canadians. Its stock is up 138% over the past five years (19% CAGR) and 633% (22% CAGR) over the past 10 years. Couche-Tard has built out a global convenience store and gas station empire.
The company has been very successful by acquiring retail portfolios, employing best practices/branding, and then generating strong organic growth. It just announced a large multi-billion-dollar acquisition in Europe, which could provide a new leg of growth. Despite its success, it trades for a reasonable 17 P/E ratio.
A top real estate stock
Another cheap stock with a great history is Colliers International (TSX: CIGI). While this stock is only up 60% (a 9.8% CAGR) in the past five years, it is up 600% (21.5% CAGR) over the past 10 years. It has a leading commercial real estate services brand globally.
In recent years, the company has expanded into property management, lending, project management, engineering, and asset management. Many are worried about the state of real estate given high interest rates.
Yet for 13 times earnings, you get a leading real estate platform with a long-term focus, high insider ownership, and rising recurring revenues streams and profitability. This is a great stock to add to a five-stock starter portfolio.
