Despite the volatility, equity markets would deliver superior returns in the long term, thus helping investors create wealth. Meanwhile, investors should start investing early in their careers to harness the power of compounding. However, investors should be careful while choosing stocks. If you are new to investing, you should invest in stocks with solid business models and stable cash flows. Meanwhile, here are my three top picks.
Waste Connections
Waste Connections (TSX:WCN) is a waste management company that collects, transports, and disposes of non-hazardous solid wastes in 43 states in the United States and six provinces in Canada. Supported by its aggressive expansion, organic growth, and operational excellence, the company has delivered total shareholders’ returns of around 520% over the last 10 years, outperforming the broader equity markets.
Meanwhile, I expect the uptrend in Waste Connections to continue. Given its strong pricing and continued acquisitions, the company’s management expects its revenue to grow by 11.6% this year to US$8.05 billion. Amid top-line growth, its net income and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) could grow by 15% and 12.6%, respectively. Further, the company has also raised its dividend at a CAGR (compound annual growth rate) of 15% since 2010. So, considering all factors, I believe Waste Connections would be an ideal buy for beginners.
Dollarama
Dollarama (TSX:DOL) is a discounted retail chain that has delivered impressive total shareholders returns of over 700% in the last 10 years. The solid financial growth amid new store openings, acquisitions, and same-store sales growth drove its financials. Over the previous eight years, the company’s revenue and EBITDA have increased at an annualized rate of 10.2% and 16.1%, respectively.
Despite the uncertain outlook, I expect the uptrend in Dollarama’s financials to continue, thanks to its expanded product offerings, value propositions, and extensive store base. Besides, the company expects to grow its store count from 1,486 to 2,000 over the next eight years. Also, the company hopes to increase Dollarcity’s store count from 440 to 850 by the end of 2029. The company’s stores are achieving an annual revenue of $2.6 million within two years of opening, thus reflecting its efficient capital utilization.
Further, the company has returned over $6 billion to its shareholders over the last 10 years through share repurchases and dividends. So, given the essential nature of its business, solid financials, and high growth prospects, I believe Dollarama would be an ideal buy for beginners.
Canadian Utilities
My final pick is Canadian Utilities (TSX:CU), which operates diversified, low-risk utility assets, meeting the electric and natural gas needs of customers. Supported by its operational excellence, the company has lowered its operating and maintenance costs in electricity distribution by 11% per kilometre of line and 29% per customer in natural gas distribution since 2015. Amid its solid performance, the company has delivered an average total shareholders’ return of 9.3% for the last 20 years.
Canadian Utilities has also raised its dividend uninterrupted for the previous 51 years, with its yield currently at 4.67%. Meanwhile, it is continuing with its three-year capital-investment plan, which would grow its rate base at an annualized rate of 2% through 2025. Given its growth prospects and solid underlying businesses, the company is well equipped to continue with its dividend growth. So, considering all these factors, I believe Canadian Utilities would be an excellent buy for beginners.
