The chances of losing money in the stock market are higher when the investment period is shorter. However, stocks have delivered the highest historical returns in a longer time frame. Some stocks can turn a small capital into a fortune.
If you only have $1,000 today, use it to purchase Hammond Power Solutions (TSX: HPS.A) or Wajax (TSX: WJX). Both stocks have long growth runways and could produce returns several times higher than your buying price. You can increase holdings as your earnings multiply over time.
High-growth stock
Hammond Power Solutions, or HPS, defy market headwinds, as evidenced by its red-hot performance this year. At $50.65 per share, the year-to-date gain is 153.30%. The total return in 3.01 years is 727.88%, representing a compound annual growth rate (CAGR) of 101.91%.
Had you invested $1,000 (50 shares) on year-end 2022, your money would be worth $2,532.50 today. However, if you invested the same amount three years ago, the capital would balloon to $8,276.44. HPD pays a modest but safe 0.98% dividend.
The $602.98 million company engineers and manufactures standard and custom or special transformers for use in countries worldwide. It dominates the transformer industry and has market-leading positions in energy distribution, renewable energy, industrial, infrastructure, and irrigation.
HPC has manufacturing plants in Canada, the U.S., India, and Mexico. Expanding existing manufacturing facilities and constructing a new one is ongoing to meet the sales growth forecast of $250 million in the next five years. Moreover, HPC gains access to more projects and customers through its vast distribution network.
In the first quarter (Q1) of 2023, the record sales of $171.13 million were 33.9% higher compared to Q2 2022. HPC’s net earnings climbed 83.5% year over year to $15.72 million. The high-growth stock also pays a modest 0.98% dividend.
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Its board chairman and chief executive officer (CEO) William G. Hammond said that management remains cautious about the business in 2023. HPC will continue to manage through high levels of growth, longer-than-expected industry lead times, and sizeable capacity expansion projects amid an uncertain economic environment.
A strong supporter of the economy
Wajax is another industrial stock worth watching. The $559.4 million company provides various services and solutions to different industries and core sectors of the Canadian economy. At $26.03 per share (new 52-week high), current investors are up 36.64% year to date and delight in the 5.09% dividend.
About 59% of total revenues comes from the Heavy Equipment segment (sales, product support, industrial parts, and rentals), while Industrial Parts & Engineered Repair Services account for 41%. Wajax’s top and bottom lines have been rising consistently every year since 2020.
In Q1 2023, revenue and net earnings increased 17.4% and 8.8% to $516.1 million and 17.5 million versus Q1 2022. Its president and CEO Iggy Domagalski credits the impressive top-line performance to the strong customer demand across all regions, not to mention the positive momentum in Canada.
Wajax expects major challenges this year, like in 2022, although management remains confident that solid fundamentals in construction, energy, and mining will drive growth in the heavy equipment business.
One-two punch
Hammond Power Solutions is my first choice if I invest $1,000 in a high-growth stock today. However, I might invest a portion in Wajax for the generous dividend yield.
