An investment of $10,000 can make you a fortune over time, especially if you put it in quality growth stocks like Alimentation Couche-Tard (TSX:ATD) and Dollarama (TSX:DOL) for a long time. For instance, in the last 10 years, $10,000 invested in Alimentation Couche-Tard stock has extraordinarily transformed into about $75,590 for annualized returns of 22.4%.
The same investment in Dollarama stock wasn’t far behind, ending with $70,380 or total returns of close to 21.6% per year.
Both superbly outperformed the Canadian stock market that ended with an investment of roughly $22,550 for returns of about 8.5% per year.
ATD, DOL, and XIU Total Return Level data by YCharts
Alimentation Couche-Tard
Alimentation Couche-Tard has built a global convenience store and gas station chain with a long track record of successful mergers and acquisitions. It sells time and convenience for people on the go.
The business is defensive with recession-resilient earnings. In the last two recessions, Couche-Tard’s earnings per share remained steady or growing. In the past three years, it increased its revenue and operating income by about 10% per year. In the same period, its net income growth rate was approximately 9.5%, while its adjusted earnings per share grew at a faster rate of 16% annually.
Management continues to see a substantial runway for growth in the United States and Asia. As well, organic growth strategies can also support growth.
Couche-Tard is a great business that could continue growing its bottom line at a double-digit rate. This is why the growth stock tends to go higher over time. Right now, at $68.49 per share, the stock trades at about 17 times earnings. Analysts think it is discounted by about 14%. So, investors could consider buying shares today.
Additionally, the stock is committed to a growing dividend. Its five-year dividend-growth rate is about 22.7%. Its payout ratio remains sustainable at about 13% of earnings.
Dollarama
Dollarama is a well-recognized value retailer that operates stores across 10 provinces in Canada. Currently, it has about 1,507 corporate-operated Dollarama stores across the country. Management sees room to grow that number to 2,000 by 2031.
Through the acquisition of a 50.1% stake in Dollarcity in 2019, Dollarama expanded into Latin America. Currently, there are about 448 Dollarcity stores in four countries in the region. Management plans to grow that number to 850 and expand into Peru by 2029.
The business appears to have recession-proof earnings. During the 2020 pandemic recession, Dollarama continued to experience earnings growth. In the past three years, it increased its revenue and operating income by about 10% per year. In the same period, its net income growth rate was approximately 12%, while its earnings per share grew at a faster rate of 15% annually with the support of share repurchases.
Dollarama is a wonderful business that could continue growing its bottom line at a double-digit rate. This is why the growth stock hardly ever goes on sale. Right now, at $85.45 per share, the stock trades at north of 28 times earnings. Analysts think the stock is fairly priced. So, investors could consider buying the top consumer staples stock over time for long-term growth.
The stock is committed to a growing dividend. Its five-year dividend-growth rate is about 8.6%. Its payout ratio remains low at about 9% of earnings.
