Are you looking for growth stocks to help you build your wealth? Growth stocks have a long track record of providing serious returns. But these returns are not guaranteed, and not all growth stocks are equal.
First, we have the growth stocks that are all revenue growth, without earnings or cash flows to speak of. These are the high-risk stocks that are not for everyone. Then, we have the growth stocks that have strong histories of steady growth over long time horizons, and strong earnings and cash flow generation. These are the stocks that I would like to focus on here.
In this article, I will explore four such stocks to buy and hold for the long haul.
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CGI – A growth stock delivering growth organically and via acquisitions
CGI Inc. (TSX: GIB.A) is a $28 billion IT and business consulting services firm that’s been steadily growing since 1976. While the company does not pay a dividend, CGI’s stock has provided investors with outsized returns over the long run, returning almost 1,000% since 2010.
This stock price performance is supported by the company’s revenue and earnings growth over this time period. Back in 2010, CGI reported revenue of $3.6 billion. In fiscal 2023, revenue came in at $12.9 billion, 260% higher. Similarly, earnings rose from $362.8 million in 2010 to $1.5 billion in 2022, more than 300% higher.
Looking ahead, CGI’s backlog recently hit an all-time high of $25 billion. Also, revenue and earnings continue to grow at double-digit rates. Finally, more acquisitions seem to be in the cards for CGI, which will further prop up revenue and earnings growth.
Stantec – Growth in infrastructure spending continues
Stantec Inc. (TSX: STN) is a top-tier global design firm that provides professional consulting services for infrastructure and facilities projects. This growth stock has enjoyed an almost 90% rise since 2010. During this time, the company also enjoyed a strong 264% increase in revenue and 52% increase in EPS.
So why do I like this growth stock? Simply put, Stantec has been benefitting from major infrastructure trends, and it is expected to continue to benefit. Issues such as the aging infrastructure, demographic and population changes, climate change, water scarcity are of pressing importance, and Stantec is helping to find solutions.
Today, Stantec is delivering the strongest growth rates in its history. Backed by a strong balance sheet, this growth stock is set to deliver.
Tourmaline stock – LNG exports to provide long-term growth
Tourmaline Oil Corp. (TSX: TOU) is Canada’s largest natural gas producer. This is a very cyclical industry that’s at the mercy of natural gas prices. However, Tourmaline has found a way to contain the volatility by being the lowest-cost producer and, more importantly, by diversifying its market exposure. This means that Tourmaline has exposure to different natural gas pricing, from LNG pricing to Canadian pricing to Gulf Coast pricing.
The long-term growth that the company has been achieving is a reflection of the success of this strategy. For example, Tourmaline’s operating cash flow per share increased more than 270% since 2010 to $4.08 in 2022. This has been accompanied by strong share price performance for this growth stock.
Looking ahead, the LNG opportunity here in Canada is very significant for Tourmaline, which will be a supplier to the largest LNG exporter, Cheniere Energy, as well as to LNG Canada when it starts up in 2025.
Waste Connections
The waste services business has been a growing one, as Waste Connections Inc. (TSX: WCN) results clearly indicate. Like CGI, Waste Connections has not only grown organically. It has also grown by consolidating the very fragmented waste management industry. And this is what has led to the company’s strong growth over the long term.
Behind the stock’s 690% rise since 2010, Waste Connections has grown its revenue from $1.4 billion in 2010 to $7.2 billion in 2022. Also, earnings have grown from $135 million in 2010 to $836 million in 2022. This growth has been fueled by strong fundamentals in the waste management industry, as well as the company’s consolidation strategy.
Lastly, this growth stock has also rewarded its shareholders with dividends. In fact, Waste Connections has grown its dividend since 2010 at a compound annual growth rate of 5.75%.
