The equity markets have turned volatile this month amid weak Chinese economic numbers and growing concerns over the banking sector in the United States. However, investors should not get bogged down by these short-term bouts of volatility but instead go long on quality stocks. Investors can create substantial wealth by staying in the market for longer horizons.
If an investor can grow his $60,000 investments at an annualized rate of around 10% for 30 years, he will have over $1 million at the end of the 30 years. So, here are three stocks that have the potential to grow at a CAGR (compound annual growth rate) over 10% in the long run and make you a millionaire by your retirement.
Dollarama
Dollarama (TSX: DOL) is one of the top stocks to have in your portfolio. Given its extensive presence – with 85% of Canadian households having a store within 10 kilometres – a wide range of products, and value offerings, the company continues to drive its financials. Since 2011, it has grown its topline and net earnings at a CAGR of 10.6% and 16.3%, respectively. Supported by this strong performance, the company has delivered impressive returns of 1,648% over the previous 12 years at a CAGR of 26.9%. Notably, the discounted retailer is trading over 9% higher this year despite the challenging environment.
Meanwhile, given its expansion plans and growth initiatives, I expect the uptrend in Dollarama’s financials to continue. The company plans to add 60 to 70 stores annually to increase its store count to 2,100 by 2031. Besides, it is strengthening its direct sourcing capabilities to offer greater value for its customers. Also, the company is focusing on improving its customer experience by expanding its digital footprint and optimizing its check-out process. While the expansion of Dollarcity, in which the company owns a 50.1% stake, could increase its contribution to its net earnings. Considering all these factors, I believe Dollarama would be an excellent long-term buy.
Waste Connections
Another enticing stock to buy with a longer horizon would be Waste Connections (TSX: WCN), which offers solid waste management services in the United States and Canada. The company operates primarily in secondary or exclusive markets. Given the lesser competition, it is able to pass on the increased expenses to its customers. Besides, the solid waste management company is expanding its footprint through strategic acquisitions. The company has acquired $21.5 billion of assets since 2011, driving its financials and stock price.
Meanwhile, Waste Connections has delivered impressive returns of around 550% over the last 12 years at an annualized rate of 16.8%. Given the essential nature of its business, continued expansion, and strong balance sheet, I expect the uptrend to continue. The company has also raised its dividends at a CAGR of 15% since 2010. So, considering all these factors, I am bullish on Waste Connections.
WELL Health Technologies
WELL Health Technologies (TSX: WELL), a digital healthcare company, would be my final pick. The adoption of virtual healthcare services continues to rise amid the development of innovative products and growing internet penetration, thus expanding the addressable market for the company. Meanwhile, Fortune Business Insights projects the global telehealthcare market to grow at a CAGR of 19.7% through 2030.
Amid a growing addressable market, WELL Health is expanding its footprint across the United States and Canada through strategic acquisitions. It has also launched several initiatives related to artificial intelligence (AI) to develop innovative applications and tools to enhance patient experience. Amid the favourable market conditions, its growth initiatives, and attractive NTM (next 12 months) price-to-earnings of 13.2, I believe WELL Health would be a solid addition to your long-term portfolio.
