If you have $100,000 and plenty of time to invest in stocks, you can reasonably become a millionaire in retirement. Now, that is not saying it will be easy. You need to find some high-quality businesses to invest in. These need to be businesses that can persistently grow earnings per share and reinvest those earnings at high rates of return for long periods of time.
Likewise, you will need time and patience, and plenty of both. Once you own a high-quality, compounding business, the best thing to do is nothing. Let the company and its managers compound your capital.
Turn $100,000 into $1 million in 16 years or less
If you put $100,000 of savings into a mix of stocks that earn 10%-plus annualized returns, that could compound into $1.2 million in 25 years. Now, if you don’t have that length of time until retirement, you will need to accelerate your returns.
If you increase your annualized average rate of return to over 15% (tough, but not impossible), you could compound $100,000 into over $1 million in 16 years or less.
TFI stock has been a serious compounder
TFI International (TSX: TFII) might be a good stock to investigate if you want a long-term compounder. It operates one of Canada’s largest freight and truck transport businesses. This is not an exciting industry. However, often if you can find the best player in a boring industry, you can unlock under-the-radar, market-beating returns.
TFI has been a great serial acquirer. It acquires crucial trucking networks and then applies operating expertise and scale to help accelerate returns. TFI has compounded earnings per share by a 19.9% compounded annual growth rate (CAGR) for the past decade.
Its stock has delivered a 23% total CAGR return in that time. You can get all that for only 15 times earnings today.
BRP still has a big growth runway
BRP (TSX: DOO) is another Quebec-based company that could still have a long runway of growth ahead. It owns some of the world’s best-known brands in all-terrain, marine, and recreational vehicles. Since 2014, this stock has earned a 16% total CAGR return.
In that time, it has compounded earnings per share by 26%. Part of that is because it has aggressively bought back around 47% of its total share count over that time.
BRP is incredibly innovative, and it has been gaining market share across its product segments. While the market worries about the effects of a future recession on its business, you can pick this stock up for less than nine times earnings.
ATD is a great stock for steadily multiplying your money
To keep the Quebec-focused theme, Alimentation Couche-Tard (TSX: ATD) is another high quality stock investors could think about owning for long-term returns. It owns and operates over 12,000 convenience store and gas stations around the globe.
Like TFI, it has made its fortune buying small and large portfolios of convenience stores around the world. Early this year, it announced a major acquisition in Europe. It provides its operating expertise and uses scale to expand margins and increase profitability.
Couche-Tard has earned a 20% total return CAGR over the decade. It has grown earnings per share by a 19% CAGR in that time. The company continues to have a large market to consolidate, which should mean shareholders should continue to keep winning in the years ahead.
