Investing in high-quality stocks can significantly enhance your returns and grow your capital over the long term. Thus, adding a few fundamentally strong stocks to your portfolio can expedite the achievement of your financial goals. However, it’s important to be cautious when selecting stocks as they are inherently risky investments.
Against this backdrop, If you have $2,500 to invest, here are the top two Canadian stocks to buy and hold for a lifetime.
goeasy
Speaking of top stocks to buy and hold forever, investors could consider goeasy (TSX:GSY). The company provides various financial services, including secured and unsecured loans, lease-to-own services, and point-of-sale financing. Thanks to its leadership in the subprime lending space and a large addressable market, goeasy has grown its sales and earnings at a double-digit rate and has delivered above-average returns in the last several years.
For instance, goeasy’s revenue has increased at a compound annual growth rate (CAGR) of 20.03% in the last five years (as of March 31, 2024). During the same period, its earnings per share (EPS) grew at a CAGR of 32.2%. Thanks to its impressive financials, goeasy stock has grown at a CAGR of 34.7% in the past five years, resulting in capital gains of about 344%.
While the company has delivered significant capital gains, the momentum in its business is likely to be sustained. goeasy is witnessing solid demand across its products and acquisition channels, including unsecured lending and auto financing. This indicates that this subprime lender is well-positioned to outperform the broader equity markets with its returns.
goeasy’s wide product range, diversified funding sources, omnichannel offerings, and geographical expansion position it well to capitalize on the large subprime lending market. Higher revenues, stable credit and payment performance, and a focus on improving operating efficiency will likely drive its earnings.
Thanks to its growing earnings base, goeasy has consistently enhanced its shareholders’ returns through higher dividend payments. goeasy increased the quarterly dividend by 21.9% to $1.17 per share in February 2024. Including this hike, the financial services company has increased its dividend for 10 consecutive years.
In summary, its solid sales and earnings growth and its commitment to enhancing shareholders’ returns through higher dividend payments make goeasy a compelling long-term bet. In addition, goeasy stock is trading at a forward price-to-earnings multiple of 10.9, which appears lucrative considering its stellar double-digit earnings-growth rate and dividend yield of 2.42%.
Shopify
Shopify (TSX:SHOP) is a top stock for creating wealth in the long term. This Canadian tech company is likely to benefit from secular tailwinds and competitive advantages over peers. While Shopify stock has corrected significantly from its COVID-led peak, it’s still up about 113% in the last five years, delivering an above-average return of more than 16% per annum.
Even though near-term growth concerns have weighed on SHOP stock, this e-commerce platform provider is well positioned to deliver durable revenue growth, driven by an ongoing shift towards omnichannel platforms.
It’s worth noting that Shopify helps businesses set up and manage stores online. Due to the structural shift in selling models, its diverse product offerings, including payment processing, sales and marketing tools, and shipping solutions, are likely to witness an uptick in demand, which will drive Shopify’s financials and share price.
Adding to the positives, Shopify is witnessing growth in Plus merchants on its platforms. Notably, these merchants have a higher retention rate and add stability to Shopify’s financials.
Overall, the ongoing shift towards digital channels, Shopify’s innovative product launches, a consistent increase in gross merchandise volumes, and higher penetration of Shopify Payments will likely support its financials. Furthermore, its focus on cost-reduction measures, transition toward an asset-light business model, integration of artificial intelligence technology, and improving take rate position it well to generate profitable growth, which will support its share price.
