Investors looking for stocks to buy and hold forever should focus on companies with solid fundamentals, resilient business models, and good growth prospects. While the TSX has several top-quality companies, here are the three best Canadian stocks I plan to hold forever.
Stock #1
With solid growth prospects, goeasy (TSX:GSY) is the top stock to buy and hold forever. The company provides loans to subprime borrowers. What stands out is this financial services company’s ability to grow its loan portfolio and maintain a solid credit profile. This enables goeasy to consistently generate strong double-digit revenue and earnings growth.
It’s worth noting that goeasy’s revenue and adjusted earnings per share (EPS) have grown at a compound annual growth rate (CAGR) of 17.7% and 29.5%, respectively, between 2012 and 2022. Moreover, its top and bottom lines sport a CAGR of 19.8% and 31.9%, respectively, in the last five years.
Thanks to its solid financials, goeasy stock has grown at a CAGR of 34.6% in the last five years, delivering a return of over 342%. Furthermore, the company is a Dividend Aristocrat and has enhanced its shareholders’ returns through higher dividend payments.
goeasy’s diversified funding sources, omnichannel offerings, wide product range, geographical expansion, and a large subprime lending market will likely drive its top line. Meanwhile, leverage from higher revenue, stable credit performance, and improving efficiency will cushion its earnings, support future dividend payouts, and drive its share price higher.
Stock #2
Dollarama (TSX:DOL) is another top Canadian stock I’ll buy and hold forever. Its defensive business model, ability to grow earnings in all market conditions, and focus on returning cash to shareholders make it a compelling bet. Dollarama sells a wide variety of products at low and fixed price points. The retailer’s value pricing strategy drives traffic at its stores in all market conditions, adds stability to its business, and supports its share price.
Dollarama’s revenue and earnings have grown at a CAGR of about 10% and 16%, respectively, since fiscal 2011. Thanks to its reliable financial performance, Dollarama stock consistently outperformed the broader equity market over the past decade. Notably, Dollarama stock has gained about 38% over the past year. Further, it has increased at an impressive 22.8% in the past decade, delivering a return of 684%. The company consistently increased its dividend during the same period.
Its extensive and growing store base, focus on value pricing, direct sourcing strategy, and product expansion will likely drive Dollarama’s sales and earnings in the coming years. Further, its growing earnings base will enable it to return higher cash to its shareholders.
Stock #3
Given the ongoing digital shift, Shopify (TSX:SHOP) is the third stock to buy and hold forever. The e-commerce platform provider is known for creating significant wealth for its shareholders. While the stock has recovered from its lows and gained approximately 60%, it is still down about 56% from its high. Thus, this provides a solid buying opportunity for long-term investors.
Shopify’s innovative product launches and the addition of new merchant features suggest that the company is poised to capitalize on the structural shift in selling models toward omnichannel platforms. Further, the growing share of e-commerce in the retail sector and the company’s dominant competitive positioning augur well for growth.
Shopify will likely benefit from the integration of artificial intelligence technology into its products. Further, its focus on reducing costs and shift towards an asset-light business model position it well to deliver sustainable earnings in the long term.
Overall, Shopify’s growing active merchant base, rising adoption of its products, increased subscription fees, and higher take rate will likely drive its financials and share price.
