These 3 Magnificent Stocks Keep Driving Higher

Constellation Software, Dollarama and another TSX stock have consistently generated positive investment returns. Here’s why they belong in your retirement portfolio.   

| More on:
Redwood trees stretch up to the sunlight.

Source: Getty Images

Canadian investors looking to grow their retirement nest eggs, build resilient investment portfolios with potential to withstand market volatility, and consistently generate market-beating returns should give Constellation Software (TSX:CSU), Alimentation Couche-Tard (TSX:ATD), and Dollarama (TSX:DOL) stock some serious consideration. The three blue-chip TSX stocks have generated spectacular returns with historical consistency. And they could keep driving higher.

Let’s take a closer look.

Constellation Software

Constellation Software is a $78.6 billion blue-chip technology growth stock that has created millionaires since its initial public offering (IPO) in 2006. CSU stock has generated 20,233% in capital gains since going public, averaging a 34.9% compound annual return over the past 18 years, with minimal draw-downs of 25% at worst. Shares have already gained 14% so far in 2024.

The company is a global leader in the highly customized vertical market software (VMS) segment. Founded in 1995 by a former venture capitalist Mark Leonard who continues to lead the successful VMS aggregator, the company regularly acquires software businesses that serve niche markets. Resultantly, Constellation Software has a sticky client base, and generates highly visible profits and cash flows year in and year out. And the market has fallen in love with the consistently outperforming Canadian tech stock.

Constellation Software’s business strategy focuses on high returns on invested capital. The business model has, and most likely will continue to stand the test of time, even during the new age of disruptive generative artificial intelligence (AI).

Looking ahead, Constellation Software has modified its acquisition criteria to include larger businesses. The company recently raised US$1 billion from the debt markets, bolstering its acquisitions-led growth capacity.

Bay Street analysts project 40.1% growth in Constellation Software’s earnings per share over the next five years. Given a forward price-to-earnings (P/E) multiple of 35, CSU stock has a price-earnings-to-growth (PEG) ratio of 1, which implies shares are fairly priced given the company’s earnings growth potential.

Despite its 275% rally over the past half-decade, investors may still buy CSU stock at current prices and get a fair deal.

Alimentation Couche-Tard

Alimentation Couche-Tard is a $78.9 billion convenience store operator with a growing physical footprint. Since 1990, the grocery, fresh food, quick-service restaurant, and fuel services company has generated a staggering 447,230% in capital gains, including a 123% return during the past five years. ATD stock continues to outperform the market as it expands its global footprint, consistently generates positive cash flow, and sustains its share repurchase program.

The business of bringing convenience to North American, European, and Asian households remains profitable in 2024. Alimentation Couche-Tard grew revenue at an average rate of 13.6% over the past three years, its earnings per share surged by 7.9% during the period, and management increased the company’s dividend payout by 26.5%. All three data points added value to ATD stock.

Looking ahead, Bay Street analysts project a 10.9% long-term earnings growth rate for ATD stock. A forward PE of 17.8 and a forward PEG of 1.9 implies shares are currently trading at a reasonable premium to their fair value.

Meanwhile, Alimentation Couche-Tard usually repurchases its shares using its vast amounts of internally generated cash flow. The company has reduced its share count by 14.9% over the past decade, reducing the total claims on its future earnings and assets. The remaining shares are increasingly valuable.


Dollarama is a $28.8 billion Canadian discount store operator profitably selling everyday consumer products, seasonal items, and general merchandise to millions of people every year. Since its IPO in 2009, DOL stock has generated 3,300% in capital gains to investors, including a 659% gain during the past 10 years.

Why does Dollarama stock keep rising? The retailer is aggressively expanding its footprint. It had an annual target to add 60 to 70 new stores in 2023. Since acquiring a stake in Dollarcity in 2013, the company has expanded the banner from 15 stores in two countries to 500 stores across four countries in just a decade.

Most noteworthy, Dollarama reported its sixth consecutive quarter of double-digit same-store-sales growth in December 2023, grew its EPS by 31%, and delivered industry-leading gross margins. Bay Street analysts expect DOL to grow earnings by 17% over the next five years.

The value retailer is actively repurchasing shares. It reduced its share count by 31.1% over the past decade. The remaining shares are more valuable, and a PEG ratio of 1.8 implies investors are willing to pay a premium to gain exposure to the top TSX stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

More on Tech Stocks

falling red arrow and lifting
Tech Stocks

Is Shopify a Buy, Sell, or Hold?

Shopify (TSX:SHOP) stock has been pulling back of late, opening up a window for dip buyers.

Read more »

Different industries to invest in
Tech Stocks

2 No-Brainer Growth Stocks to Buy Now With $2,000 and Hold Long Term

These growth stocks have already proven their worth this year, but are solid investments for long-term holders as well.

Read more »

woman data analyze
Tech Stocks

1 Stock That’s Just as Hot as Nvidia (Without All the Hype)

Nvidia (NASDAQ:NVDA) stock has surged in share price, but so has this stock, with a far lower share price to…

Read more »

Index funds
Tech Stocks

Constellation Software Stock: Buy, Sell, or Hold?

Unveiling the Code: Should you Buy, Hold, or Sell Constellation Software (TSX:CSU) stock at current levels?

Read more »

A plant grows from coins.
Tech Stocks

Got $5,000? These Are 2 of the Best Growth Stocks to Buy Right Now

Growth investors should have these two tech stocks high up on their watch lists.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Tech Stocks

Well Health Stock Is Down 58% From its Highs – Time to Buy?

Well Health stock has been hit, but the company remains on a path of record-breaking revenues as it approaches positive…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

TFSA: The Most Expensive Stock in Canada Is a Top Buy Today

CSU stock (TSX:CSU) may be the priciest stock on the TSX today, but there is a very good reason for…

Read more »

TFSA and coins
Dividend Stocks

TFSA: Invest $15,000 in CSU Stock and Get $4,694 in Passive Income

CSU stock (TSX:CSU) has surged in the last year, yet even if growth slows by half, you could create immense…

Read more »