New investors looking to double up need to extend their time horizons. Otherwise, they could find themselves extending their risk profile, perhaps by a drastic amount. The greater the reward potential you seek, the more risk you tend to bear.
As a value investor, your mission is to maximize the reward relative to the risks. In other words, you want to get the absolute best risk/reward opportunity in the market at any given time. Undoubtedly, this is easier said than done, especially if you’re a new investor who hasn’t been in the investment game for very long.
Still, I believe that beginner investors can learn the ropes and do well over time rather than having to settle for average. While I’m also a big fan of index funds (those that track the S&P 500, not the undiversified TSX Index) for investors who don’t want to have to put in the work, I do think that it is possible to do better than average as long as you stick with sound investment principals.
Further, you need the patience, discipline, and ability to stick with what you know. Warren Buffett called it staying within your “circle of competence.”
Beating the market doesn’t have to entail being a hero
Even for those investors seeking to crush the market averages, it’s tough to forego the hottest momentum plays that only seem to move higher day after day. It’s only human to be tempted by red-hot stocks that cannot seem to gravitate lower. While one can jump in with less regard for valuation, one may be left in tears at the end of the day once most other retail investors are ready to book profits and run to the hills.
In this piece, we’ll look at one relatively cheap Canadian growth stock that I believe has a realistic chance of doubling over the next five years and three quarters (let’s say close to six years!)
So, if you seek a double by 2030, the following play may just be the way to get that impressive risk/reward. If you’re looking to gain over the next six months rather than the next six years, though, you’ll have to take some serious risk. And for most investors, such a high level of risk may not be worth taking, especially if you’re new to the investing world. Without further ado, let’s get into the name:
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) stock looks like an absolute bargain after recently correcting from all-time highs. Undoubtedly, the firm has a track record for unlocking value via M&A. As the convenience store scene gains the upper hand over fast-food restaurants (they’ve gotten pricy of late!), I do believe that Couche-Tard and the broader convenience store plays can gain over the next few years.
M&A may be the name of the game, at least over the medium term. However, over the long haul, I believe fresh food is key to next-level growth. On that front, Couche-Tard is a star in its own right. I’d look for the stock to double by 2030 as it moves forward with its ambitious five-year plan which, I believe, entails massive next-level top- and bottom-line growth.
