Earning $1 million in a decade is no easy feat. If you have $200,000 to invest today in TSX stocks, you will need to earn a minimum 17.5% annual average rate of return to compound it into $1 million in 10 years.
Most top fund managers will never achieve that rate of return consistently over their careers.
Yet, all it takes is a homerun stock to drastically accelerate your long-term returns. If you are looking for TSX stocks that could be millionaire makers, here are four to consider today.
A TSX small-cap stock with great capital allocation
TSX small cap stocks are a great place to look for outsized returns. If you wanted to invest $50,000, you might want to look at TerraVest Industries (TSX: TVK).
This stock only has a market cap of $750 million. It has compounded total (including dividends) annual returns by 36% over the past five years and 30% over the past 10 years.
The company acquires bargain-priced industrial and energy-related businesses and uses operating expertise to maximize cash flow generation. It is not an exciting mix of businesses, but the real key is its ability to deploy capital at high rates of return.
This TSX stock has considerable upside if it can continue to effectively deploy capital into smart acquisitions.
An industrial stock with massive demand tailwinds
Another small-cap stock that could multiply a $50,000 investment is Hammond Power Solutions (TSX: HPS.A). It only has a market cap of $922 million today. Hammond is one of the leading manufacturers and suppliers of power transformers, energy solutions, and automation products.
This TSX stock has earned shareholders a 32% compounded total annual return over the past decade. Over that period, Hammond has compounded earnings per share by over 26%.
With the energy transition and digital revolution in full motion, demand for Hammond’s power products for electric car charging stations, data centres, and energy infrastructure has exploded.
That trend doesn’t look to abate anytime soon. That could make Hammond a great long-term buy.
A TSX financial stock with above average growth
goeasy (TSX: GSY) is another stock for a $50,000 decade-long investment. It has compounded total annual returns by 42% over the past five years and 29% over the decade.
This TSX stock has become one of the largest non-prime lenders in Canada. With interest rates elevated, Canada’s big banks have tightened lending standards. As a result, higher quality near-prime consumers are coming to goeasy for lending solutions.
This has enabled goeasy to grow its loan book, but at a lower risk. The company has become a dominant brand. These favourable trends should help enable strong mid-teens growth for many years ahead.
A transport stock for the decade ahead
With a market cap of $15 billion, TFI International (TSX: TFII) is the largest of the pack. However, TFII could still make for a strong investment. It has compounded total annual returns by 41% over the past five years and 24% over the past 10.
This TSX stock has grown to become one of Canada’s largest freight carriers. It is also a major player in the United States. The company has grown by consolidating the transport sector. It has made 125 acquisitions over the past 15 years.
The transportation leader just announced the major acquisition of a specialized truckload transport business. If it can continue to allocate capital in a similarly wise manner, there could still be considerable growth in profits and cash flows ahead.
The Foolish takeaway
All these TSX stocks trade for mid-teen price-to-earnings ratios. If you want growth at fair/reasonable valuations, these are some the best stocks you can find today.
