With top Canadian stocks trading at a discount and an expected slowdown in the interest rate hikes, now is an excellent time to create a long-term portfolio. However, to create a winning long-term portfolio, one must invest in companies that are growing rapidly, have solid fundamentals, and are profitable. Thankfully, the TSX has several top companies that match these criteria and are poised to deliver stellar returns.
So, for investors who can spare $5,000, here are three stocks to confidently own for the next 20 years and generate solid capital gains.
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Dollarama
Dollarama (TSX:DOL) is an excellent stock for the next 20 years. While it operates a recession-resilient business, it has been growing superbly, positioning it well to deliver solid returns in the long term. It offers a wide range of products at low-fixed-price points, making it a go-to place for consumers looking for value, supporting its financials and stock price.
Shares of this retail company consistently outperformed the broader market and have more than doubled in the past three years. This outperformance comes on the back of its double-digit gains in revenue and earnings over the past several years.
Dollarama’s value pricing, an extensive network of stores in Canada, and a growing global footprint could continue to support its financials and stock price. Meanwhile, its increasing earnings base suggests that its management will likely enhance its shareholders’ returns through higher dividend payments and share repurchases.
goeasy
goeasy (TSX:GSY) is one of my top bets to create a significant amount of wealth in the long run. The company that offers secured and unsecured loans to subprime borrowers has been growing at a breakneck pace and made considerable money for its shareholders, thanks to the double-digit sales and earnings growth.
goeasy’s top line increased at a CAGR (compound annual growth rate) of 20% in the past five years. Meanwhile, its earnings grew at a CAGR of 27% during the same period. At the same time, its stock appreciated by over 209%, and the company consistently increased its annual dividend, generating massive returns for its investors.
Its growing consumer loan portfolio, omnichannel offerings, and high-quality loan originations will drive its revenue at a solid pace in the coming years. Also, its steady credit quality and operating leverage will cushion its bottom line, driving its stock price and future dividend payments. goeasy stock witnessed a pullback and is trading at forward price-to-earnings multiple of 6.5, which is much below its historical average, and offering an excellent buying opportunity.
Aritzia
Fashion retailer Aritzia (TSX:ATZ) could be a solid addition to your long-term portfolio, and there are good reasons for that. Despite macro and geopolitical concerns, which are taking a toll on consumer spending, Aritzia has delivered double-digit sales and earnings growth. Its strong performance amid challenges shows the resiliency of its business.
Thanks to its robust sales and earnings growth, Aritzia stock has generated market-beating returns of approximately 254% in the last five years.
Aritzia stock is poised to benefit from the ongoing momentum in its business, led by a favourable mix of full-priced selling and an increase in boutique counts. The company expects to grow its top line by a mid-teens rate (CAGR of 15-17%) through 2027 and projects its earnings growth to come higher than sales. Overall, its solid business and stellar growth will support Aritzia stock.
