It has been a strong year for many growth stocks in Canada. Fortunately, great companies tend to deliver strong returns for patient, long-term shareholders.
Source: Getty Images
Patience (and a little more) can win the day when investing
Buy-and-hold investing can be a rather drab exercise. Once you do the work to research to buy a share in a business, there is not much more to do than sit on your hands. Other than a quarterly/annual review to confirm your investment thesis, there is not much more action required.
A few noteworthy investors (like Warren Buffett) have made careers by picking smart businesses and holding them for years. Now, that doesn’t mean it is easy. Great businesses worth holding for decades are hard to find. Yet, when you find them, you can do extremely well.
If you are wondering what sorts of stocks are worth buying and holding for a very long period, here are two great stocks to consider today.
A transport stock with upside from here
TFI International (TSX: TFII) is not an exciting or flashy business. It provides transportation and logistics services across North America. It started out as a largely Canadian service provider, but it has now become a major player in the United States as well.
TFI has a lot of characteristics that an investor wants in a long-term business. Firstly, it has a long-term chief executive officer who has a large personal stake in the business. Alain Bedard is a good business operator and a smart capital allocator. Under his leadership, TFI has acquired over 180 companies into its fold.
Secondly, the company has a very strong model for industry-leading profits and high returns on capital. The company cuts out unprofitable, volume-based businesses and focuses on segments that have high returns on profitability.
Lastly, this stock trades at a large discount to its U.S. peers. It discusses value-accretive opportunities like a spin-out or other merger opportunities. All of these factors could help move its valuation to other similar peers.
TFI has a great track record. Shareholders have earned a 440% total return over the past five years and a 923% total return over the past 10 years. With a market cap of only $16 billion, it still has a long highway of growth ahead.
A retailer for a long-term hold
Another growth stock worthy of a long-term hold is Alimentation Couche-Tard (TSX: ATD). Like TFI, it is not the most exciting business. It owns and operates over 15,000 convenience store, gas stations, and car washes around the world.
Yet, this stock has delivered very strong returns. It has earned shareholders a 132% total return over the past five years and 477% over the past 10 years.
Couche-Tard has many things to like as a long-term shareholder. Its chairman, Alain Bouchard, is the founder. His stake in the company is worth billions. He helped build an empire by acquiring small and medium convenience chains across North America, Europe, and Asia.
With top brand convenience brands, economies of scale, and a growing product/service assortment, the company earns very strong margins and cash flows. While acquisition growth is its key growth opportunity, it also has a great plan to grow organically.
The company expects to double earnings over the next five years. For a stable and well-managed growth stock, Couche-Tard can continue to provide solid returns in the years ahead. It’s a great bet for any investor looking to hold a great business for the years ahead.
