When investors think of growth opportunities in the stock market, they often turn towards recent initial public offerings (IPOs) and other high-risk investments. However, contrary to popular belief, large-cap stocks can also provide investors with outstanding — and, in some cases, market-beating — returns. In addition to that, large-cap stocks tend to be more stable than smaller growth stocks, making them very appealing investments.
In this article, I’ll discuss three of my favourite Canadian large-cap stocks.
The largest stock in my portfolio
The single largest holding in my portfolio is Constellation Software (TSX:CSU). This is a name that should be very familiar to experienced investors but maybe not to those who are newer to the market. Constellation Software is a consolidator within the tech space. In other words, its business is to acquire smaller businesses and integrate them into its massive network of companies. Since its founding in the mid-1990s, Constellation Software has managed to optimize its business practices.
This can be illustrated by Constellation Software’s stock chart. Since its IPO, the stock has gained more than 17,600%! If you had invested $10,000 in this stock around the time of its IPO in 2006, you’d be a millionaire today. Despite its massive gains, Constellation Software stock has shown no signs of slowing down. Over the past year, it has gained nearly 53%. In my opinion, as long as its founder, Mark Leonard, continues to lead this company, I will be fully confident in allocating a large portion of my portfolio towards it.
Another great stock to consider
Investors should also consider buying shares in Brookfield Corporation (TSX:BN). This stock was previously known as Brookfield Asset Management prior to a spinoff, resulting in a new stock under the same name. However, today’s Brookfield Corporation is essentially the exact same as the old Brookfield Asset Management. This company operates a portfolio of assets totalling about $850 billion. It has exposure to the insurance, renewable utility, real estate, infrastructure, and private equity industries.
Over the past year, Brookfield Corporation stock has gained about 23%. Although that’s not nearly as impressive as the return generated by Constellation Software, it’s important to put it into perspective. The TSX has gained just north of 7% over the same period. In other words, Brookfield Corporation — a company with a boring business — has managed to outperform the broader market by three times. Those are returns that I’d welcome in my portfolio any day of the week.
One stock that I wish I owned
Finally, Alimentation Couche-Tard (TSX:ATD) is a stock that many Canadians — including me — have been sleeping on for far too long. This company operates more than 14,000 convenience store locations across 25 countries and continents. If you’re unfamiliar with this company, perhaps you know the other banners that it operates under, which include the likes of Circle K, On the Run, Daisy Mart, and many more.
With a market cap of about $73 billion, Alimentation Couche-Tard is actually a lot bigger of a company than most Canadians think it is. Over the past year, Alimentation Couche-Tard stock has gained more than 27%. In addition to that outstanding growth, this stock offers investors a very intriguing dividend that has grown 10-fold since 2013. That represents a compound annual growth rate of about 27%. Every way you look at it, Alimentation Couche-Tard deserves a spot in your portfolio.
