The TSX Composite Index rallied by more than 8% in 2023, attracting the attention of many new investors towards the stock market. However, if you’re new to the stock market and eyeing the Toronto Stock Exchange with dreams of quick, substantial gains, you may want to rethink your strategy. While the allure of quick returns is definitely tempting, this path is fraught with big risks.
It’s important for new investors to understand that a long-term investment approach with the well-proven Foolish Investing Philosophy is not just safer but potentially more rewarding. Focusing on the bigger picture and investing with patience could help you benefit from emerging market trends in the long run. That said, let me quickly highlight two of the best TSX stocks to buy in 2024 that can help you earn some eye-popping returns if you hold them for at least the next 10 years.
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Lightspeed stock
Lightspeed Commerce (TSX:LSPD) is a fundamentally strong Canadian growth stock that you can consider buying in 2024 to hold for the long term. After rallying by 24.2% in the last year, LSPD stock currently trades at $24.66 per share with a market cap of $3.8 billion.
This Montréal-based tech firm focuses on offering a complete commerce service that makes it easier for small- and medium-sized merchants to grow their business, manage both online and store sales, and improve customer service. Their system also helps merchants handle payments across the globe and connect with suppliers.
In the four years between its fiscal year 2019 and 2023 (ended in March 2023), Lightspeed’s total revenue has jumped 843%. During these four years, its adjusted annual net loss reduced from US$5.53 per share to US$0.17 per share, as it continues to inch closer to sustainable profitability.
The consistently increasing demand for its one-stop commerce services and its focus on expanding its global presence can help Lightspeed’s financials grow at a fast pace, making it a very attractive TSX stock to buy in 2024 and hold for years to come.
OpenText stock
OpenText (TSX:OTEX) could be another amazing Canadian tech firm to invest in 2024. This Waterloo-based company currently has a market cap of $14.6 billion as its stock trades at $53.63 per share after advancing by 31.3% in the last year. OTEX specializes in information management through its software and services, and its client base includes public and private businesses of all sizes and individuals globally.
Interestingly, OpenText is also among a handful of tech companies that reward their investors with decent dividends. At the current market price, this TSX stock offers an annualized dividend yield of 2.5% and distributes its dividend payouts every quarter.
In the five years between its fiscal year 2018 and 2023 (ended in June 2023), OpenText’s sales have grown positively by 59.3% despite facing pandemic-driven operational challenges and other macroeconomic worries in between. During these five years, its adjusted earnings also improved by 28.5%. Another key factor that makes OpenText’s business model reliable and its financial growth trends predictable is the strong share of annual recurring revenue in its total sales. In its fiscal year 2023, annual recurring revenue made up about 81% of its total revenue.
Besides that, OpenText continues to utilize artificial intelligence to make its software solutions more attractive to help its customers make decisions faster with more insights and improved visibility. Given that, I wouldn’t be surprised if this top TSX stock continues to outperform the broader market by a huge margin in the next decade.
