You can build a stock portfolio that can significantly multiply wealth over a lifetime. A $5,000 investment that compounds an average of 15% annually could be worth $80,000 in 20 years. If you are wondering what Canadian stocks could grow at this rate, here are five for lasting wealth.
A Canadian financial above the rest
goeasy (TSX: GSY) has been an incredible stock for Canadian investors. Over the past five years, goeasy stock has risen 279% (or by a 30% compounded annual rate). Add in dividends, and total returns hit over 330%!
goeasy is the largest non-prime lenders in Canada. The company has a retail network that is nearly impossible to replicate. goeasy is always innovating and adding new products. It will start deploying credit card products later this year. That could significantly expand its total addressable market.
This stock could easily compound by over 15% over the next several years. It yields 2.9% and has an impressive dividend-growth record. Despite its strong trajectory, its valuation is very reasonable.
A real estate stock set for a rebound
Colliers International Group (TSX: CIGI) is up 9,986% over the past 20 years. It has compounded returns by over 16% per annum in that time. Colliers is a major commercial real estate broker across the world.
However, it has recently expanded its recurring service categories in property management, consulting, engineering, and asset management. 70% of its revenues are recurring today.
The company has its eye on some major acquisitions in 2024. If it can execute like it has in the past, it should still have many years of strong returns ahead.
A software spin-out with a long runway
Constellation Software has been one of the best stocks in Canada over the past 15 years. Yet, with a price of $3,664, its stock is hard to fit into a $5,000 portfolio. That’s why its spin-out child, Topicus.com (TSXV: TOI), is a great alternative.
Topicus is doing the same thing as Constellation, but in Europe. It acquires niche software businesses, juices the cash flows, and invests in more software businesses.
It also happens to be growing faster organically than Constellation. It’s a pricey stock, but it does trade at a discount to Constellation.
Go long this boring industrial stock
Another great Canadian compounder that almost nobody knows about is TerraVest Industries (TSX: TVK). This stock is up 473% in five years. That is 39% compounded annual return.
For such returns, you would be surprised that it is a manufacturer of propane/LNG/flammable liquids tanks and water boilers/furnaces. These are not exactly exciting businesses.
However, it can use scale and manufacturing expertise to earn elevated returns. The company can acquire these businesses at attractive valuations so it can earn strong returns on the capital it utilizes. It has a large market it can continue to consolidate.
A top Canadian transport business
A final Canadian stock that could continue to generate wealth is TFI International (TSX: TFII). It is up 424% over the past five years for a 39% compounded annual return.
TFI has grown by a combination of smart operating expertise and excellent acquisition capabilities. It has added over 90 trucking and transport businesses over the past 10 years.
This stock still trades at a reasonable valuation, and it has opportunities to unlock more value (spinouts or business combinations). For a business with a top-quality management team and opportunities to keep improving and expanding returns, TFI is an excellent choice for long-term growth.
