Investing over the long term is one of the best strategies as it is less susceptible to short-term fluctuations while delivering superior returns. However, investors should be careful when choosing stocks, as not all stocks will deliver multi-fold returns. Given their healthy growth prospects, I believe the following three stocks can continue their uptrend and deliver multi-fold returns over the next 20 years.
Celestica
Celestica (TSX: CLS) offers supply chain solutions to various customers covering the aerospace, defence, communication, health tech, industrial, and capital equipment sectors. It provides expertise and insights at every stage of product development. Supported by its solid financials and exposure to high-growth markets, such as the electronics manufacturing services and artificial intelligence sectors, the company has delivered over 107% returns this year.
In the first quarter that ended on March 31, Celestica’s topline grew by 20% to $2.2 billion, beating its guidance. The strong performance of its CCS (Connectivity & Cloud Solutions) segment overcame the weakness of the ATS (Advanced Technology Solutions) segment to drive its sales. Amid topline growth, gross margin expansion and a decline in SGA (selling, general, and administrative) and interest expenses, its adjusted EPS (earnings per share) expanded by 83% to $0.87.
The growing demand for AI/ML (artificial intelligence and machine learning) compute products has created multi-year growth potential for Celestica. Besides, its diversified customer base and an attractive NTM (next 12 months) price-to-earnings multiple of 17.7 make it an excellent long-term buy.
Waste Connections
Waste Connections (TSX: WCN) is another top stock that has outperformed the broader equity markets this year, with returns of 14.8%. Its continued acquisitions and solid quarterly performances have driven its stock price. As of April 24, the waste management company has completed several acquisitions that could contribute US$375 million to its annualized revenue. With the company terming this year as one of its busiest, I expect more acquisitions to happen in the coming quarters.
Regarding organic growth, WCN is constructing several resource recovery and RNG (renewable natural gas) facilities, three of which could become operational this year. Meanwhile, management expects these facilities to contribute an incremental annual EBITDA of $200 million by 2026. Besides, the company has boosted its dividends at a CAGR (compound annual growth rate) of 14% since 2010. Given the essential nature of its business and higher growth prospects, Waste Connections could be an ideal long-term buy.
goeasy
goeasy (TSX: GSY) is my final pick. The subprime lender has posted impressive performances over the last five years, with its revenue and adjusted EPS (earnings per share) growing by 20% and 32%, respectively. Continuing its uptrend, the company’s revenue and adjusted EPS grew 24% in the first quarter that ended on March 31. It witnessed record loan originations of $686 million during the quarter, thus expanding its loan portfolio to $3.9 billion.
Further, goeasy is adding new merchants, strengthening digital infrastructure, and making strategic initiatives that could drive growth across its multiple verticles. The subprime lender has also adopted a superior underwriting and income verification process and next-generation credit models, which could lower defaults. Amid these growth initiatives, management expects its loan portfolio to grow by 55% from its current levels to reach $6 billion by 2026. The expanding loan portfolio could boost its top and bottom lines. Notably, the company has also rewarded its shareholders by raising its dividends at an annualized rate of around 30% since 2014. Considering all these factors, I am bullish on goeasy.
