Investors looking to invest $20,000 in stocks should consider investing in shares of companies with solid fundamentals and well-established businesses. Further, one should focus on diversifying their portfolio to spread risk.
Against this backdrop, let’s look at four Canadian stocks with the potential to deliver stellar gains.
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goeasy
goeasy (TSX: GSY) is a top stock to invest in right now. The company provides lending services to non-prime consumers in Canada. What stands out is its impressive growth rate. Notably, goeasy’s revenue and earnings sport a 10-year compound annual growth rate (CAGR) of 17.7% and 29.5%, respectively. Further, the financial services company has grown its dividend for nine consecutive years.
goeasy benefits from its diversified revenue streams, omnichannel offerings, and a large subprime lending market. Additionally, its solid credit performance and operating leverage cushion its bottom line.
For instance, goeasy’s revenue has grown at a 10-year compound annual growth rate (CAGR) of 17.7%. The momentum in goeasy’s business will likely sustain in the coming years led by higher loans and operating efficiency. Further, goeasy could continue to enhance its shareholders’ returns through increased dividend payments.
Its shares are trading at the next 12-month price-to-earnings multiple of 9.5, which appears attractive given its double-digit earnings growth and a yield of 2.5%.
Shopify
Investors could consider investing in shares of the Canadian tech giant Shopify (TSX: SHOP). While its stock price marked a recovery over the past year, it is still trading at a significant discount from its peak. The e-commerce giant is well-positioned to capitalize on the shift in selling models towards omnichannel platforms.
Further, its durable revenue growth, ability to drive merchandise volumes, and growing adoption of its products augur well for growth. Additionally, its focus on innovation and transition towards an asset-light business model bodes well for growth.
Overall, Shopify’s dominant competitive positioning in the e-commerce space, solid revenue growth, ongoing digital shift, innovative products, and improving take rate will support its share price. Moreover, its focus on delivering sustainable earnings supports my optimistic outlook.
Dollarama
Shares of the value price retailer Dollarama (TSX: DOL) could be a solid addition to your portfolio for its defensive business and high growth. In addition, Dollarama consistently enhances its shareholders’ returns via higher dividend payments.
While Dollarama operates a low-risk business, its stock has gained over 653% in the past decade, exceeding the broader market by a wide margin. This appreciation in its value reflects Dollarama’s ability to grow traffic in all market conditions.
Dollarama’s value pricing strategy and extensive domestic store base could continue to drive its top line. Meanwhile, leverage from higher sales, a focus on reducing costs, and direct product sourcing will cushion its earnings and support share price and dividend payouts.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX: BEP.UN) is a top stock to capitalize on the growing demand for green energy. Brookfield owns a diversified portfolio of renewable power-generating assets. Moreover, it boasts a solid 155,000-megawatt development pipeline.
Investors should note that the majority of Brookfield’s power output is contracted and has protection against inflation. These long-term contacts add stability to its earnings and cash flows, and enable the company to return significant cash to its shareholders.
Brookfield’s focus on diversifying its cash flows and increasing the contracted components of its income mix will add stability to its cash flows and support future dividend distributions.
