This month, my investor colleagues and I are celebrating the 10th anniversary of Motley Fool Stock Advisor Canada by looking back at our track record and making some bold predictions about the future.
Stock Advisor Canada’s Returns
As for our track record, we’re immensely proud to be beating the TSX by almost 24 percentage points over that time, with our 56% average return trouncing the index’s 32% return.
How did we do it?
From the time we made our first stock recommendations 10 years ago, these Foolish investing principles have served as our guiding light:
- Buy businesses, not tickers.
- Be a lifetime investor.
- Time arbitrage. (taking advantage of the market’s short-term bias)
- Fish where others aren’t.
- Check emotions at the door.
- Keep score.
- Be Foolish and have fun!
Top 10 TSX Stocks to Own for the Next Decade
With those Foolish investing principles firmly in mind, my team and I identified 10 companies – some based in Canada, some not – that we think have competitive dynamics that essentially allow them to play by their own rules. Those are the kinds of businesses that dominate their markets and end up rewarding investors time and again.
This little-known company is up 69% since we started following it in 2020, beating the TSX Composite Index by 33 percentage points. (That’s an annualized return of 19% versus the benchmark’s 11%.)
Never heard of ASML (NASDAQ: ASML)? Unless you work in the semiconductor industry, that’s not surprising. This is a highly specialized company focused on a niche technology that just happens to be the linchpin of a $400 billion-plus industry. Just about every investing buzzword you can think of — artificial intelligence stocks, machine vision, big data, self driving etc — is built on the back of microchips … and ASML dominates a crucial part of the chip-making process.
The company makes advanced semiconductor photolithography systems. (Stay with me here.) Photolithography is the process by which microscopic circuits are etched onto wafers that ultimately become individual chips. Literally every one of the billions of chips in the world today was made by this process. No matter who the manufacturer was, a lithography system was required.
Not only is ASML already the market leader in photolithography, but it also has the world’s only “extreme ultraviolet” system necessary to make the most advanced 7-nanometer-and-under chips. The growing shift toward 7-nanometer chips means even more market share for ASML – and higher margins.
The name might not be familiar, but ASML is in an enviable position. Its photolithography systems are an absolute necessity in manufacturing any kind of semiconductor chip, and when it comes to newer, denser chips, the company has a monopoly. That means it can take more share of a global market that continues to grow steadily, while also increasing margins and profits. That’s a winning hand, and one that comes with relatively low risk.