Investing regularly in the equity markets can provide you with the opportunity to create long-term wealth and benefit from the power of compounding. While equities as an asset class are extremely volatile in the near term, they have the potential to generate game-changing returns over time.
Basically, investors need to identify quality stocks and hold them for several years, resulting in outsized gains. Here are three stocks you can add to your equity portfolio if you plan to invest $1,500 today.
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EQB stock
Valued at $3.4 billion by market cap, EQB (TSX: EQB) is among the hottest bank stocks in Canada. Trading near all-time highs, EQB has returned 1,000% to shareholders in dividend-adjusted gains in the past two decades.
It also pays shareholders an annual dividend of $1.60 per share, translating to a forward yield of 1.8%, which is not too high. But these payouts have increased by 21% annually since January 2005, which is exceptional for a bank stock.
Despite its market-beating returns, EQB trades at a cheap multiple and is priced at 7.4 times forward earnings. Moreover, analysts expect the TSX bank stock to increase adjusted earnings by 19.5% annually in the next five years.
Analysts, too, remain bullish and expect EQB stock to gain roughly 15% in the next 12 months.
TFI International stock
Valued at $15.4 billion by market cap, TFI International (TSX: TFII) has surged over 800% in the last 10 years. TFI provides transportation and logistics services in North America and ended 2022 with 11,442 tractors and 38,091 trailers.
Due to challenging macro conditions, analysts expect TFI’s sales to fall by 16% year over year to $10 billion, while earnings might narrow by 24% in 2023. However, between 2024 and 2027, its earnings are forecast to grow by more than 20% annually.
In December 2023, TFI International disclosed its plans to acquire Daseke, a specialized transportation and logistics company in North America.
Daseke’s operations include 4,900 tractors, 11,000 specialized trailers, and one million square feet of industrial warehousing space. On a pro forma basis, the Truckload segment is expected to generate $3.6 billion in total sales, making TFI one of the largest truckload businesses globally.
WSP Global
The final TSX stock on my list is WSP Global (TSX: WSP). Valued at $23 billion by market cap, WSP provides strategic advisory, engineering, and design services to clients seeking solutions in sectors such as transportation, infrastructure, energy, water, and mining.
In the third quarter (Q3) of 2023, WSP reported revenue of $2.73 billion, an increase of 24.7% year over year. While organic growth stood at 6.7%, acquisitions accounted for 15.3% of top-line growth.
WSP ended Q3 with a backlog of $14.3 billion, which represents 12.1 months of revenue, providing investors with enough near-term visibility.
Due to higher sales and lower operating expenses, WSP grew adjusted earnings before interest, tax, depreciation, and amortization by 28.1% to $521.5 million in the quarter, increasing its margins by 50 basis points to 19.1%.
Priced at 24 times forward earnings, WSP Global trades at a discount of 14% to consensus price target estimates.
