Investors seeking significant returns over the next five years could consider companies backed by strong fundamentals and catalysts to deliver solid growth. For instance, a company with a proven track record of delivering high growth and the ability to keep growing at a decent pace will enable you to outperform the broader markets.
With this backdrop, here are three Canadian stocks you can buy and hold for five to generate attractive returns.
Image source: Getty Images
A multi-channel fashion house
One could consider investing in the fashion house Aritzia (TSX:ATZ). Aritzia has a stellar track record of delivering high growth in the past. Investors should note that its net revenue has a CAGR, or compound annual growth rate, of 26% between fiscal 2019 and fiscal 2023. During the same period, its adjusted net income grew at an average annualized rate of 23%.
Aritzia’s new boutique openings, solid e-commerce business, growing brand awareness, and focus on cost savings will help it to deliver solid revenues and earnings in the coming years. In addition, the company is planning to bring newness across its offerings, which is positive.
The company is optimistic and expects its top line to grow at a CAGR of 15-17% through 2027. Meanwhile, its bottom line could exceed its sales growth.
A digital healthcare company
Investors looking for high-growth stocks could consider the digital healthcare company WELL Health Technologies (TSX:WELL). The company has been delivering attractive growth, despite economic uncertainty and a challenging macro environment.
WELL Health will likely benefit from the continued growth in omnichannel patient visits. Moreover, the strength in its virtual healthcare services (the high-margin business) will cushion its bottom line. While the company focuses on steadily growing its market share, its investments in artificial intelligence, accretive acquisitions, and new product introductions will accelerate its growth rate and expand its addressable market.
WELL Health stock is up about 66% year to date. Despite the recent rally in WELL Health stock, it is trading incredibly cheap. The stock is trading at the next 12-month enterprise value-to-sales ratio of 1.8, much lower than its historical average, making it a compelling medium-term investment near the current levels.
An e-commerce leader
My final pick is Shopify (TSX:SHOP). This e-commerce platform provider is worth buying near the current levels and holding it for at least the next five years. The reason is that Shopify stock looks compelling at the current valuation and has significant growth opportunities.
The ongoing shift in selling models toward omnichannel platforms provides a solid foundation for long-term growth. Meanwhile, the company now focuses on the asset-light model that can deliver sustainable earnings. Moreover, it consistently expands its sales and marketing channels through partnerships with social media companies and large-scale retailers. This will drive Shopify’s merchant base and the top-line growth.
It is worth highlighting that Shopify’s revenue growth rate is accelerating. Moreover, its product attach rate is expanding. The company has delivered positive free cash flow in the past three consecutive quarters and expects the free cash flows to improve in the second half of 2023.
With its strong competitive positioning in the e-commerce space, asset-light business model, and innovative products, Shopify will likely deliver strong growth and eye-catching returns.
