Stocks have consistently outperformed many other assets, offering superior returns over the long term. Therefore, investors should invest a part of their savings into equities to meet long-term financial goals.
While stocks deliver superior returns, not all are reliable bets. Therefore, one should consider shares of fundamentally strong Canadian companies with the potential to deliver durable revenue and profitable growth for decades.
Against this backdrop, let’s delve into five Canadian stocks in which you can confidently invest $500 right now to generate substantial capital gains and outperform the broader markets.
goeasy
goeasy (TSX:GSY) has consistently delivered double-digit sales and earnings growth, making it one of the top stocks to buy right now. For instance, its revenue boasts a compound annual growth rate (CAGR) of 19.8% in the last five years. During the same period, its earnings per share (EPS) increased at a CAGR of 31.9%. Thanks to this stellar growth, goeasy stock has grown at a CAGR of an impressive 34.3% in five years, delivering a capital gain of 338%.
In addition to its market-beating returns, this subprime lender has enhanced its shareholders’ returns through higher dividend payments.
The company is poised to deliver strong sales through the expansion of its consumer loan portfolio, a large addressable market, diversified funding sources, and geographical expansion. Moreover, leverage from higher revenue, steady credit performance, and improving operating efficiency will likely cushion its earnings and drive its share price and dividend payouts.
Dollarama
Dollarama (TSX:DOL) is a compelling stock for investors looking for stability, income, and growth. The discount retailer consistently generates solid revenue and earnings due to its value pricing strategy and a large store base. Despite operating a low-risk and defensive business model, Dollarama stock has appreciated 188% in five years, beating the benchmark indices by a wide margin. Moreover, it has consistently increased its dividends during the same period.
Its defensive business model, value pricing strategy, growing store network, direct sourcing strategy, and initiatives to reduce merchandise costs bode well for future revenue and earnings growth. This will likely push its share price higher, enabling the company to return higher cash to its shareholders.
Shopify
Shopify (TSX:SHOP) is a leading e-commerce platform provider well-positioned to capitalize on the digital shift. The stock has corrected significantly from its peak, providing an excellent buying opportunity for long-term investors. Its ability to drive merchandise volumes and deliver durable revenue growth in all market conditions acts as a catalyst.
Further, Shopify’s ongoing transition toward an asset-light business model and innovative product launches augur well for future growth. Adding to its positives, Shopify will likely benefit from its improving take rate, adoption of new products, and focus on delivering profitable growth.
Aritzia
Clothing company Aritzia (TSX:ATZ) took a beating due to the slowdown in growth. Despite short-term concerns, the company is well-positioned to accelerate its sales and earnings growth rate in the coming quarters, which will likely drive its stock price higher.
Aritzia’s financials will likely benefit from the opening of new boutiques and the introduction of new product assortments. Additionally, its focus on improving its online customer experiences and broadening its omnichannel offerings will likely boost its sales and earnings, in turn boosting its share price.
WELL Health
Investors could consider WELL Health Technologies (TSX:WELL) stock currently trading extremely cheaply. This digital healthcare company has been rapidly growing its revenues thanks to the continued growth in its omnichannel patient visits. Moreover, it continues to deliver positive adjusted net income, which supports my bull case. Further, the company is actively pursuing profitable growth strategies, driving its cash flows.
Besides solid organic sales growth and a strong balance sheet, WELL Health is well-positioned to focus on growth initiatives, which will likely drive its market share. Further, the company’s investments in artificial intelligence technology will help develop new products and support its financials.
