Got $3,000? 3 TSX Stocks You Can Confidently Own for the Next 20 Years

These are the best TSX stocks to invest $3,000 for the next 20 years and generate significant capital gains.

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While economic uncertainty poses challenges, top Canadian stocks with solid fundamentals will likely outperform the TSX and deliver outsized returns over the next 20 years. Thankfully, several high-quality Canadian stocks are trading at a discount, providing an excellent opportunity for investors to buy these top stocks cheap and gain from the appreciation in their values over time. 

So, if you can spare $3,000, I’ll discuss three TSX stocks with the potential to deliver multi-fold returns in the coming years. These stocks have made their investors rich and have multiple catalysts to fuel the rally in their prices. 

A high-growth defensive stock

With its high-growth and defensive business model, Dollarama (TSX:DOL) is a solid stock to own for the next 20 years. It sells a wide variety of products, including consumables, at low- and fixed-price points, making it a go-to place for consumers in all market conditions. 

Thanks to its recession-resilient business and high growth (its top and bottom line are growing at a double-digit rate), this Canadian value retailer’s shares have outperformed the broader market by a significant margin. Dollarama stock has gained about 98% in three years, reflecting an average annualized return of over 25%. 

Dollarama is poised to benefit from its capital-efficient business model (lean operations), direct sourcing, and compelling value at multiple and low fixed-price points. In addition, its extensive store base (presence in all Canadian provinces) and expansion in international markets augurs well for growth.

A fast-growing financial services company 

Shares of Canada’s leading non-prime consumer lender, goeasy (TSX:GSY), are a must-have for growth and income in the long term. The financial services company has been growing rapidly. For instance, its revenue and earnings sport a CAGR (compound annual growth rate) of 20% and 27%, respectively. 

Thanks to its stellar growth, goeasy stock has gained substantially in value and made a significant amount of money for its shareholders. goeasy stock has increased at a CAGR of 33% in the past three years (including the recent pullback), reflecting an overall gain of over 135%. 

While goeasy has outperformed the TSX, it has the potential to deliver multi-fold returns in the coming years. Its high-quality loan originations, solid credit quality, efficient underwriting, and operating leverage could drive its top and bottom line at a double-digit rate over the next several years. Also, goeasy’s growing earnings base positions it well to boost its shareholders’ value through higher dividend payments. 

A top-quality fashion house 

Lifestyle apparel company Aritzia (TSX:ATZ) is an attractive long-term bet. This fashion house has been consistently delivering stellar sales. Moreover, it runs a profitable business. Given the strong demand for its offerings, Aritzia stock has more than doubled in three years. 

To be precise, Aritzia stock gained over 118%, reflecting a CAGR of close to 30%. However, the stock has witnessed a sharp drop following the announcement of fourth-quarter financial results. The company’s margins took a hit due to the inflationary headwinds and additional warehousing costs. Further, its fiscal 2024 sales growth guidance of 10-14% disappointed investors. 

Despite the near-term challenges, Aritzia’s business model remains strong, with solid long-term growth prospects. The company is up against tough year-over-year comparisons amid a weak macro environment. 

Overall, the strong demand for its products, new boutique openings, expansion in the U.S., and investments in e-commerce will likely accelerate its growth and drive its share price higher. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aritzia. The Motley Fool has a disclosure policy.

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