While the economic trajectory remains uncertain, a few Canadian stocks with fundamentally strong businesses continue to deliver solid financial performances. The addition of these stocks can help you earn attractive returns in the long term, which makes them compelling investments near the current levels.
If you plan to invest in equities in August, below are my three top picks to generate multi-fold returns over the next decade.
Shares of design house Aritzia (TSX:ATZ) would be a solid addition to your portfolio in August. Its ability to rapidly grow its revenue and earnings, attractive store economics, and strong growth opportunities led by boutique expansion position it well to outperform the broader markets over the next decade.
Investors should note that Aritzia’s net revenue increased at a compound annual growth rate (CAGR) of 26% between fiscal 2019 to fiscal 2023. Furthermore, the company’s management expects its net revenue to grow by 15-17% annually through 2027, which is encouraging.
The company’s future revenues will be driven by the expansion of its U.S. business and e-commerce growth. Aritzia currently has only 47 boutiques in the United States. Thus, it has a significant runway for growth in this fast-growing market. Aritzia has already identified 100 locations in the United States and plans to expand its presence steadily. Meanwhile, the new store economics remains attractive with a low average payback period.
Overall, the strength of its e-commerce business, brand awareness, expansion in the U.S., and focus on generating cost savings will enable it to deliver solid growth and drive its stock price higher.
Canada’s largest air cargo company Cargojet (TSX:CJT), is another compelling stock to buy in August. Thanks to its solid fundamentals and robust financial performance, Cargojet stock has consistently outperformed the broader market averages over the past several quarters. While economic uncertainty has led to a pullback in Cargojet stock, this presents a solid buying opportunity for long-term investors.
Cargojet is poised to benefit from its strategic partnerships with top logistics companies. These partnerships offer reliable growth and are earnings accretive. In addition, the company’s next-day delivery capability to more than 90% of the Canadian population is a solid competitive advantage.
Furthermore, its long-term customer contracts with minimum revenue guarantees and cost pass-through provisions augur well for growth. Moreover, a high retention rate, fleet optimization, and strength in the Aircraft, Crew, Maintenance, and Insurance segment will likely support its growth.
With its defensive business and solid store presence in Canada and the United States, Alimentation Couche-Tard (TSX:ATD) stock could be a great addition to your portfolio in August. The convenience store operator has a solid track record of delivering profitable growth in all market conditions. Further, it continues to enhance its shareholders’ returns through higher dividend payments and share repurchases.
For instance, its top line has increased at a CAGR of 7% in the past decade. Higher sales and operating leverage have helped it to grow its adjusted earnings per share at a CAGR of 19%. During the same period, Couche-Tard raised its dividend at a CAGR of 26.6%.
Looking ahead, its growing sales, accretive acquisitions, solid earnings growth, and ability to return substantial cash to its shareholders will act as growth catalysts.