These top Canadian stocks have amazingly at least doubled and quadrupled investors’ wealth in the last five and 10 years, respectively. Don’t miss these stocks by putting them on your radar!
Canadian Pacific
In the last five years, Canadian Pacific Kansas City (TSX:CP) stock turned an initial $10,000 investment into about $21,190. In other words, it delivered an annualized return of 16.2% in the period. In the last decade, the top industrial stock transformed an initial $10,000 investment into about $45,660, which equated to annualized returns of 16.4%.
CP transports bulk commodities (e.g., grain, coal, and fertilizers) and energy, chemicals and plastics, metals, minerals, consumer, automotive, and forest products. Canadian Pacific just completed the merger with Kansas City Southern in April, which provides a rosy outlook for its long-term growth potential, as it is the first single-line railway that connects Canada, the United States, and Mexico. Because the market has high expectations of the company, the stock trades at a high multiple.
Its five-year return on assets were solid at about 9%. Its five-year return on equity of 26.2% also suggests great capital allocation on the management’s part. And its five-year return on invested capital was 14.1%.
At about $107 per share at writing, the stock trades at about 24.9 times its forward earnings. Besides, economists anticipate an upcoming recession by 2024 in Canada and the United States, which typically triggers a selloff in the railway stock. That said, the 12-month analyst consensus price target suggests the stock trades at a discount of 10%.
So, if you like the stock for a long-term hold, you can buy a little bit today and potentially load up if it sells off meaningfully in a recession. For your reference, in the last two recessions, it declined more than 20% from peak to trough.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) stock turned an initial $10,000 investment into about $23,030 in the last five years. In other words, it delivered an annualized return of almost 18.2% in the period. In the last decade, the top stock has transformed an initial $10,000 investment into about $74,460, which equates to annualized returns of 22.2%.
Although it’s categorized as a consumer discretionary stock, its earnings have been highly resilient in the last 20 years through economic cycles. In the past 10 fiscal years, Couche-Tard increased its earnings per share at a compound annual growth rate of about 23%. This indicates that the convenience store and roadside fuel retailer has been a quality and defensive business.
Its five-year return on assets was solid at 9.5%. Its five-year return on equity of 23.3% also suggests great capital allocation by the management. And the five-year return on invested capital was 13.8%. The company does have a track record of strategic mergers and acquisitions (M&A) that support its profit growth and drive long-term shareholder value.
Going forward, Couche-Tard still sees M&A opportunities for growth, particularly in the United States and Asia. Combined with organic growth opportunities, Couche-Tard has a good chance of doubling investors’ money.
At $73 per share at writing, the stock trades at about 18 times earnings. And the 12-month analyst consensus price target suggests the stock trades at a discount of 11%. So, long-term investors can buy shares in the defensive stock.
