Many investors dream of creating a $1 million portfolio. By doing so, you can set yourself up for a very comfortable retirement. However, if you wish to do that, then it’s imperative that you choose the right companies and hold shares for a long enough time. There are many very promising stocks in the market, but I think there are only a handful of stocks that could generate these kinds of returns. In this article, I’ll discuss two TSX stocks that I think could turn into $1 million holdings for you after 20 years.
This has been one of the best TSX stocks since its IPO
Since its initial public offering (IPO), very few stocks have managed to keep up with Constellation Software (TSX:CSU). If you’re a seasoned investor, you may have heard of this company before. However, for newer investors, this may not be a very familiar name to you because it doesn’t operate a consumer-facing business. However, I strongly believe Constellation Software is as good as it comes.
This company acquires vertical market software (VMS) businesses. For much of its history, Constellation Software has focused on small- and medium-sized VMS businesses. However, since 2021, the company has made a large effort to incorporate large VMS business acquisitions into its operations. This has transpired in deals like the WideOrbit transaction that resulted in Lumine Group listing as a public company.
As mentioned earlier, Constellation Software stock has been on fire since its IPO. Since 2006, Constellation Software stock has gained more than 17,400%! That represents a compound annual growth rate (CAGR) of 35.5%. If we look at the stock’s performance over the past five years, we can see that it has grown at a CAGR of nearly 32%. If an investor were to put $10,000 into this stock today and let it run for 20 years, Constellation Software stock would only need to return 26% per year to turn into a $1 million position.
I strongly believe this stock can do it. It has the track record to support it, and its founder, Mark Leonard, still plays an important role in the company.
One of the most influential companies today
Shopify (TSX:SHOP) is another company that I think could net you a big return over the next 20 years. This is a company that really doesn’t need much introduction. It provides merchants of all sizes with a platform and many of the tools necessary to operate online stores. More than one million merchants around the world rely on Shopify to power their online stores today.
Since its IPO, Shopify stock has gained nearly 2,800%. That represents a CAGR of about 48.5%. If we assume that the stock can grow at a rate of 30% over the next 20 years, then all you’d need to build a $1 million portfolio would be $5,300 invested today. The global e-commerce industry should continue to grow as consumers continue to get more comfortable with online shopping. With that said, the question becomes whether Shopify can maintain or grow its market share over the next two decades. I think it can.