The TSX boasts several fundamentally strong stocks that have consistently delivered above-average returns and created significant wealth for their shareholders. While these Canadian stocks have experienced considerable gains, their resilient business model and potential to generate profitable growth suggests they could continue to deliver notable capital gains and dividend income in the long run.
Against this background, here are three of the best Canadian stocks to I’d buy and hold forever.
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Shopify
Shopify (TSX:SHOP) is poised to capitalize on the transition towards omnichannel selling models. The technology company provides infrastructure for multi-channel commerce. Shopify’s software enables merchants to market and sell their products across multiple platforms. This, in turn, attracts new merchants, helps retain revenue from existing merchants, and increases sales to both new and existing ones.
Shopify’s multi-channel platform and growing share of e-commerce in overall retail sales augur well for long-term growth. Moreover, its focus on driving innovation and developing new solutions to extend its platform’s functionality is positive. Further, Shopify is integrating artificial intelligence (AI) technology into its products and platform, which will likely boost its volumes and revenue.
It’s worth noting that Shopify is transitioning towards an asset-light business model, which will ease pressure on margins and enable the company to deliver sustainable profit in the long term. Overall, Shopify’s durable revenue growth, focus on adding more merchants to its platform (merchants outside North America increased 35% in 2023), innovation, increase in subscription fees, and higher take rate will drive its financials and share price.
goeasy
goeasy (TSX:GSY) is one of my top picks for creating wealth in the long term. Shares of this financial services company are known for consistently generating stellar returns and outperforming the broader markets. goeasy provides loans to subprime borrowers and benefits from a large addressable market. In addition, its ability to grow loans and manage credit risk effectively supports its top- and bottom-line growth.
goeasy’s loan book has grown at a compound annual growth rate of 35% between 2019 and 2023. Meanwhile, its free cash flows sport a CAGR of 33% during the same period. Thanks to its stellar growth, goeasy stock has increased at a CAGR of about 34% in the last five years, delivering capital gains of approximately 333%. Furthermore, its growing earnings base has enabled it to consistently pay and increase its dividends for years.
Looking ahead, goeasy stock will likely benefit from its growing consumer loan portfolio. The company’s omnichannel offerings, wide product range, diversified funding sources, and geographical expansion will likely drive its top line. Further, leverage from higher revenue, stable credit performance, and improving efficiency will cushion its earnings and drive its share price higher.
Dollarama
Dollarama (TSX:DOL) is a compelling long-term investment due to its defensive business model and high growth. The discount retailer sells a wide variety of products at low and fixed price points, making its business model relatively resilient and stabilizing its performance. Further, Dollarama’s ability to grow earnings in all market conditions and focus on rewarding shareholders with share repurchases and higher dividends support my bull case.
Dollarama’s revenue and earnings have been growing at a double-digit rate since fiscal 2011. Thanks to its reliable financial performance, Dollarama stock has gained about 697% in the past decade and consistently outperformed the broader equity market. The company uninterruptedly increased its dividend during the same period.
In the coming years, Dollarama’s extensive and growing store base, focus on value pricing, direct sourcing strategy, and product expansion will likely fuel its financials and, thereby, its share price.
