Long-term investing is a prudent strategy as it allows investors to enjoy the power of compounding while shielding against short-term fluctuations. Meanwhile, the United States Bureau of Labor Statistics announced yesterday that the producer price index, which measures wholesale prices, rose 0.1% in July compared to June. It was lower than analysts’ expectation of 0.2%. Lower-than-expected inflation has raised hopes of interest rate cuts and easing recession fears. So, the TSX/S&P Composite Index rose around 1% yesterday and is up 8% year-to-date.
Amid improving investor sentiments, here are three roaring stocks you can buy and hold for the next 20 years to earn oversized returns.
goeasy
goeasy (TSX:GSY) has outperformed the broader equity markets, with returns of over 20% this year. Its solid quarterly performances and raising of its three-year guidance have increased investors’ confidence, driving the company’s stock price. Notably, the company has acquired just 2% of the $218 billion Canadian subprime market. So, its scope to expand its business looks massive.
Meanwhile, the company’s expanded product offerings, multiple distribution channels, solid digital infrastructure, and extensive presence across Canada would allow the company to increase its market share. Besides, it is strengthening its auto financing and retail, home, and healthcare verticals, which could support its growth in the coming years.
Moreover, the Bank of Canada has adopted monetary easing initiatives by slashing interest rates twice this year. Investors hope the central bank can cut interest rates one more time later this year. Falling interest rates could boost economic activities, thus driving credit demand and expanding the addressable market of goeasy. Besides, the company has rewarded its shareholders through consistent dividend growth. Over the last 10 years, GSY has raised its dividends at an annualized rate of 30% and currently offers a forward yield of 2.5%. It also trades at an NTM (next 12 months) price-to-earnings multiple of 19, making it an attractive buy.
Waste Connections
Another stock that has outperformed the broader equity markets this year is Waste Connections (TSX:WCN). The Canadian waste management company, which operates in secondary and exclusive markets in the United States and Canada, has returned over 25% year-to-date amid its solid quarter performances and healthy growth prospects.
Year-to-date, the company has acquired 18 assets, which can contribute around $500 million to annualized revenue. The company’s management expects its M&A (merger and acquisition) activities to continue in the second half. So, the management projects the contribution from acquisitions to its annualized revenue could increase to $700 million by the end of this year. Besides, the company is also focusing on organic growth and constructing several renewable natural gas and resource recovery facilities, which could become operational in the coming years. Given its healthy growth prospects, I expect the uptrend in WCN’s financials to continue, making it an excellent buy.
Enbridge
Third on my list would be Enbridge (TSX:ENB), which has returned 17.6% year-to-date. Falling interest rates and healthy second-quarter performance have driven the midstream energy company’s stock price. Meanwhile, the company, which has already acquired East Ohio Gas Company and Questar Gas Company, expects to close the acquisition of Public Service Company of North Carolina this quarter.
These acquisitions would diversify Enbridge’s business and stabilize its cash flows, thus enhancing its long-term dividend growth prospects. Further, the company is progressing with its $24 billion secured capital program by investing $6 to $7 billion annually, strengthening its asset base. These growth initiatives could boost its cash flows, thus allowing it to continue its dividend growth. Meanwhile, Enbridge has raised its dividends for the previous 29 years at an annualized rate of 10% and offers a healthy forward yield of 6.8%. Besides, its valuation also looks attractive, with its NTM price-to-earnings multiple at 17.9. Considering all these factors, I believe Enbridge would be a compelling long-term buy.
