If you still happen to have cash after all the Black Friday sales, you might want to think about buying quality TSX stocks. While a new “bargain” priced television or electronic trinket can bring near-term gratification, a stock is something that can bring long-term rewards.
Unlike most Black Friday products that depreciate right after you buy them, stocks in great businesses build value over long periods of time. If you can defer spending on near-term gratification, you can use that cash to build long-term wealth.
If you have some extra cash and are wondering how to grow it long term, here are three TSX stocks for patient investors to consider.
A boring industrial stock with a great record
TFI International (TSX:TFII) may be a boring trucking, transport, and logistics company. Yet there is nothing boring about its 295% and 685% respective total returns over the past five and 10 years.
Trucking is a very fragmented sector. A smart, efficient operator can consolidate many smaller operators and benefit from economies of scale. While trucking is not an ultra-high margin business, a strong operator like TFI can earn high-teens rates of return on the capital they invest.
This TSX stock has a shareholder-aligned chief executive officer, a strong balance sheet, and good opportunities to continue its expansion strategy. This year, TFI has been challenged by a temporary recession in the transport segment. That just means you can buy the stock at a relatively attractive 15 times 2024 expected earnings.
A very cheap TSX financial stock
Another TSX stock that might be a little higher risk, but has a great long-term record of returns is goeasy (TSX:GSY). It has earned a five- and 10-year total respective return of 293% and 1,025%!
goeasy provides loans to consumers that are largely not serviced by Canada’s big banks. This tends to be a riskier market to lend to. However, goeasy compensates for this risk by conservative loan underwriting and charging higher interest rates.
Over the past few years, goeasy has consistently been diversifying and improving the quality of its loans. This has helped earnings per share grow by a compounded annual growth rate (CAGR) of 30% over the past five years.
Despite its quality business, this stock trades for 10 times earnings. It also pays a nice 3% dividend yield, which is a nice little bonus as well.
A diversified TSX stock at a fair price
One TSX stock that goes below many investor’s radar is Calian Group (TSX:CGY). While its stock has had recent weakness, it has delivered a decent 100% total return over the past five years.
It operates a mix of businesses that operate in healthcare, specialized training, cybersecurity and IT management, and satellite technologies. 50% of its contracts are with government customers. The remainder is with commercial enterprises. Government contracts tend to be very stable and help maintain a relatively low-risk business mix.
Calian recently had a rough third quarter, and the stock fell. Management was quick to adjust its cost structure and is focusing on maintaining margins. It announced two major acquisitions in 2023 that could start to accrete growth next year.
This stock trades with a normalized price-to-earnings ratio of 16. Over the past three years, it has been growing at about the same rate, so it looks like a decent bargain today.