Most TSX stocks witnessed a solid recovery over the past year as fear of recession diminished and inflation stabilized, pacing the path for interest rate cuts in the future. While many Canadian stocks have experienced considerable gains, there remains significant room for further growth. Meanwhile, several fundamentally strong stocks are trading at discounted prices, offering a good buying opportunity.
Against this background, here are five stocks to buy and hold for the next five years to generate above-average returns.
Shopify
Shopify (TSX: SHOP) stock has gained about 54% over the past year. However, the stock has further upside potential as it is poised to gain from its leading position in the e-commerce space amid an ongoing shift in selling models towards omnichannel platforms. Further, its ability to deliver durable revenue growth and focus on delivering sustainable earnings in the long term are positives.
Shopify will likely benefit from the integration of artificial intelligence (AI) technology into its offerings. Additionally, Shopify’s innovative product launches and the addition of new features are likely to drive its merchant base and transaction volume. Moreover, its improving take rate, focus on reducing costs, increased subscription fees, and shift towards an asset-light business model position it well to deliver sustainable earnings in the long term.
Celestica
Celestica (TSX: CLS) stock is up about 257% in one year. The stock has more room to run as the AI-driven demand will likely boost its financials. The company’s business remains relatively resilient thanks to its diversified portfolio and exposure to high-growth markets.
Further, Celestica will likely benefit from the growing adoption and deployment of AI computing by its hyperscaler customers. This will boost its Connectivity & Cloud Solutions (CCS) business. Further, strong demand across its commercial aerospace submarkets will likely sustain and drive its Aerospace and Defense (A&D) business. While its Advanced Technology Solutions (ATS) segment is facing short-term challenges, the structural shift towards electric vehicles and smart energy solutions presents solid growth opportunities in the long term.
goeasy
goeasy (TSX: GSY) stock has consistently outperformed the broader markets and delivered significant gains over the past decade. The upward trend in goeasy stock will likely sustain due to its ability to rapidly grow its revenues and earnings. This subprime lender will continue benefiting from higher loan originations and expanding its consumer loan portfolio.
Moreover, the large addressable market, diversified funding sources, and geographical expansion will continue to drive its revenue. The leverage from higher sales and steady credit performance will boost its earnings and drive dividends and share price.
Ballard Power Systems
Ballard Power Systems (TSX: BLDP) stock has lost substantial value and underperformed the broader markets over the past year. A decline in its order book and mounting losses dragged its stock lower. However, Ballard Power System has solid long-term growth prospects as demand for its proton exchange membrane (PEM) fuel cell products is likely to rise.
The ongoing shift towards green energy will boost demand and adoption of its zero-emission products. Further, the company’s new product launches, focus on diversification, and product cost-reduction initiatives augur well for growth and position it well to deliver significant growth.
Lightspeed
Lightspeed Commerce (TSX: LSPD) stock is trading at a significant discount from its 52-week high. While this technology stock trades cheaply, it is well-positioned to capitalize on the digital shift. Adding to the positives, Lightspeed is likely to benefit from the increase in its high-value customer base, which is driving its average revenue per user (ARPU), lowering churn rate, and cushioning its margins.
Further, the company’s strategy of integrating payments into its software platform will enable it to improve unit economics and support long-term earnings growth. Moreover, its focus on strategic acquisition continues to broaden its customer reach, product offerings, and features and strengthen its competitive positioning.
