Growth stocks are not inherently unsafe, but there is a common assumption that growth stocks typically come with a higher level of volatility and require a healthy risk appetite. However, several top stocks are trading on the TSX that offer a powerful combination of growth and stability. These are the stocks that almost all investors, including very conservative ones, can hold in their portfolios for decades.
A railway stock
Canadian Pacific Kansas City (TSX:CP) was already among Canada’s only two railway giants and one of the most reliable growth stocks in the country a few years ago.
But now, after acquiring a U.S. railway business that extended its reach to Mexico, it has become an even more compelling pick. Its status as the first single-line rail network that combines three North American countries has augmented its healthy business model.
The stock has grown by about 286% in the last 10 years, and if you add the dividends, the overall returns for the period reach 320%. Despite being a well-established Aristocrat, it’s not a great pick for dividends because the yield is usually too low (0.7% now), but its growth potential more than makes up for its dividends. It also boasts a healthy beta of 0.83.
A gold royalty company
Gold is considered a safe investment during adverse events like market crashes and recessions, but many gold stocks fail to deliver in healthy markets. Franco-Nevada (TSX:FNV), one of the largest gold royalty and streaming companies in the world, is an exception to this phenomenon.
It’s partly because of its business model, which is not as exposed to gold prices as gold mining or even exploration businesses are.
Another reason for its contrarian performance (compared to other gold stocks) is that its portfolio is quite diverse. While gold still dominates, it makes up about 55% of the total assets under the Franco-Nevada purview.
The stock grew about 280% in the last 10 years, and the growth momentum hasn’t slowed down much. The dividends, while not attractive from a yield perspective, are rock solid considering the company’s finances and history as an Aristocrat. It has a beta of just 0.6.
A waste management company
While it’s not a traditional utility company, Waste Connections (TSX:WCN) is almost as safe as many utility stocks in Canada. That’s partly because, just like utilities, people are highly dependent upon the services it offers: garbage collection and disposal. But it’s also one of the largest waste management companies in the region, with a massive footprint in the U.S. and Canada.
The stock has been growing powerfully and consistently over the last 10 years. It has grown over 390% over this period, which is quite impressive considering its size. Even though the growth has slowed down in recent years, the trajectory is still bullish, and the stock is highly resilient against weak markets and dips. It has a beta of about 0.67.
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Foolish takeaway
The three blue-chip stocks are leaders/giants in their respective industries, with healthy business models and healthier financials. If there is even a modest possibility that they will keep offering growth on a similar scale as they offered in the last decade, it would be a smart decision to buy and hold them long term, ideally for multiple decades.
