The Canadian stock market is doing all it can to return to all-time highs. The S&P/TSX Composite Index is up more than 10% since last October and is now down just 5% from highs set in early 2022.
Many stocks on the TSX had a year of redemption in 2023. Despite the broader market still trading below all-time highs, there’s no shortage of Canadian stocks trading at all-time highs today.
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Is now the time to load up in the Canadian stock market?
With the market as hot as it is right now, it’s natural for investors to question whether they’d be better off waiting for a pullback to put some money to work in the stock market. For short-term investors, that could be the right move. But for those with long-term time horizons, I’d strongly argue that choosing the right company to invest in is much more important than choosing the right time to invest.
My point is that if you’re planning to hold a position for decades or longer, there’s no use trying to time the market. Instead, I’d suggest using your time and energy to research businesses with growth potential that you’d be comfortable holding for years to come.
With that in mind, I’ve reviewed three top companies that any long-term investor should have on their radar.
Stock #1: Constellation Software
Nearing a price of $4,000 a share, Constellation Software (TSX:CSU) requires a steep price to entry. But if you can afford it, there are not many TSX stocks that can compete with the tech stock’s track record of market-beating returns.
Shares of Constellation Software have returned close to 300% over the past five years, with 60% of those gains coming over the past 12 months.
At a market cap of $80 billion, growth rates have understandably slowed in recent years. That being said, we are nowhere near the point of questioning this growth stock’s ability to outperform the market.
Stock #2: Descartes Systems
In comparison to Constellation Software, Descartes Systems (TSX:DSG) is a much more under-the-radar tech stock. The company is valued at a modest $10 billion market cap, but the tech stock still offers plenty of market-beating growth potential.
Shares are up 180% over the past five years. In comparison, the broader Canadian stock market has returned less than 50%, excluding dividends.
If you’re looking for a market-beating growth stock with a dependable track record, Descartes Systems is for you.
Stock #3: Bank of Montreal
When it comes to growth, Bank of Montreal (TSX:BMO) is no match for the two tech stocks on this list. However, when it comes to passive income, Bank of Montreal is in a league of its own within the Canadian stock market.
The Big Five all own impression dividends. Where Bank of Montreal sets itself apart is its payout streak. In addition to yielding close to 5% at today’s stock price, the $90 billion bank has been paying a dividend to its shareholders for close to 200 consecutive years.
I wouldn’t bet on Bank of Montreal being a consistent market beater in the coming years. But if you’re looking for a dependable stream of passive income, this bank stock should be at the top of your watch list.
