You don’t need to be any sort of genius or market wizard to do well in the stock market over the long run. What you do need is the discipline and patience to let the power of Canadian (and American) businesses do their thing. Of course, you also need to resist the pull of quick gains from speculative investment instruments like cryptocurrencies and all the sort.
There will always be some sort of hot play that everybody around the water cooler wants to get a front-row seat to. Unfortunately, by the time you hear about the next hot trend, it may already be too late to obtain a risk/reward tradeoff that’s anywhere close to being decent.
At the end of the day, too many new investors seem easily drawn in by momentum.
Momentum investing is a strategy used by some traders, but it’s a dangerous one if you don’t understand the stakes and have a plan for when things inevitably head south. In 2022, a lot of new investors who chased tech got punished severely.
Fear and greed are major movers of markets. If you can stay on track with your retirement plan and not let greed pull you into the next bubble, you will likely surprise yourself on your DIY investment journey.
Simple stocks can deliver amazing results!
When it comes to investing, it may make more sense to think about minimizing big mistakes, rather than capitalizing on every opportunity that flies outside your radar. Indeed, it’s the truly devastating losses (ones you can’t quite recover from) that can hurt your retirement trajectory. We’re talking losses north of 70% or more. It’s tough to climb back from such a devastating hit.
In this piece, we’ll consider two incredibly boring stocks with simple businesses and a pathway to market-beating results over the next 10 years.
Waste Connections (TSX:WCN) may be a boring, easy-to-understand company, but it’s one that’s delivered stellar results for investors over the years. Not only does the firm have a nice moat protecting its share of the waste-collection market, management has continued to uncover merger and acquisition opportunities in the space. The result? Solid earnings growth that’s been less sensitive to fluctuations in the markets or expectations for the North American economy.
Over the past five years, the stock has soared over 86%. Those are good returns for such a simple business!
At 43.1 times trailing price to earnings, WCN shares are more or less fair valued. Currently down 4% from its all-time high, I think investors seeking a portfolio stabilizer will continue to do well with the name over the next five years. Looking ahead, look for management to trim away at costs while pushing further into the hazardous waste scene. Indeed, not an exciting place to be but a pretty profitable one.
Alimentation Couche-Tard (TSX:ATD) is the midst of a two-and-a-half-year-long rally. Led higher by impressive growth, same-store sales-boosting efforts, and acquisitions, the company has seen shares move higher without the help of multiple expansion. Indeed, markets have been hot this year, mostly due to multiple expansion in high-tech names. Couche-Tard moves higher due to real earnings growth, which adds downward pressure to the price-to-earnings multiple.
At writing, shares trade at 16.5 times trailing price to earnings. As the company pushes to make more deals, expect more bottom-line growth to drive shares higher. And eventually, I think some multiple expansion will be warranted, as investors discover the stable growth they’ve been missing out on.