Stocks have consistently yielded superior returns compared to many other investment avenues in the long term. Therefore, dedicating some of your savings to equities can help you build wealth over time.
However, it’s important to find shares of companies with solid fundamentals that can deliver sustainable revenue and earnings growth. This approach enhances the likelihood of outperforming the overall market.
In this context, let’s examine the best Canadian stocks to invest $20,000 in right now and create wealth in the long term.
Shopify
Shares of the e-commerce platform provider Shopify (TSX:SHOP) have gained nearly 85% in one year. Further, it has delivered a return of about 317% in five years, reflecting a compound annual growth rate (CAGR) of more than 32%. Despite its market-beating returns, Shopify stock is still down significantly from its peak, providing a good entry point for long-term investors.
Supporting Shopify’s bull case is its ability to generate durable revenue even amid macro challenges. Further, an increase in active merchants on its platform and a higher subscription fee augur well for growth. Also, Shopify’s focus on lowering operating expenses, and transition toward an asset-light business model are positives.
Overall, Shopify’s growing share in retail sales, dominant competitive positioning in the e-commerce space, increased active merchant base, improved take rate, and higher adoption of its products provide a solid foundation for long-term growth.
goeasy
goeasy (TSX:GSY) is a solid stock to create wealth in the long term. Shares of this subprime lender have grown at a CAGR of 34% in the last five years, outperforming the benchmark index. In addition to capital gains, goeasy has enhanced its shareholders’ value through increased dividend payments.
goeasy’s ability to rapidly grow its revenue and earnings, a large subprime lending market, geographic expansion, and diverse revenue streams will support its top-line growth in the coming years. Further, its solid underwriting capabilities, steady credit performance, and efficiency improvements will cushion its earnings.
While goeasy is growing its earnings at a double-digit rate and offers a yield of 2.8%, its stock trades at a next 12-month price-to-earnings multiple of 10.1. This makes goeasy attractive on the valuation front and provides an excellent buying opportunity.
Dollarama
Dollarama (TSX:DOL) is a dependable stock to create wealth, earn a steady income, and stabilize your portfolio. This retailer sells products at low and fixed price points, which drives traffic to its stores in all market conditions. While Dollarama’s business has insulation against economic situations, its ability to grow sales and earnings at a solid pace supports its dividend payments and share price.
Dollarama stock has grown at a CAGR of over 24% in the past five years. Further, its value pricing strategy, extensive store base, broad product range, and focus on reducing merchandise costs will likely drive its future revenue and earnings and, in turn, its share price.
Celestica
Celestica (TSX:CLS) stock could be a solid play to capitalize on the artificial intelligence (AI) wave. It provides manufacturing and supply chain solutions, and its Enterprise end market revenue benefits from strong demand for AI and machine learning (ML) computing from its hyperscaler customers.
Celestica has been among the top-performing TSX stocks over the past year. CLS stock has gained over 248% in one year. Further, it is up about 482% in three years, reflecting a CAGR of over 79%.
The significant growth potential stemming from AI-led demand provides a solid foundation for future growth for Celestica. Further, its ongoing productivity initiatives, flexible balance sheet, and focus on high-margin businesses will likely support its top- and bottom-line growth.
