Investing in stocks provides an opportunity to achieve substantial capital growth. Historically, stocks with solid fundamentals have consistently delivered stellar returns, often surpassing other investment options.
Therefore, despite the seemingly modest amount, allocating $1,000 into Canadian stocks has the potential to yield considerable returns over the years.
With that in mind, here are the best Canadian stocks to buy with $1,000 right now.
Dollarama
Shares of Canadian value retailer Dollarama (TSX:DOL) should be in your portfolio for consistent growth, income, and stability. The retailer’s defensive business model, ability to consistently grow its sales and earnings in all economic situations, and commitment towards rewarding its shareholders with higher dividend payments make it a dependable investment for generating solid capital gains and consistent income.
Dollarama’s success stems from its value-driven pricing strategy. This retailer sells a wide range of products at fixed, low prices. This approach attracts a diverse customer base, ensuring steady sales even amid economic downturns. Higher revenue and operating efficiency allow Dollarama to grow its earnings at a decent pace, which in turn fuels its ability to pay and increase dividends to shareholders.
Dollarama’s solid financial performance has significantly boosted its share price. Over the past year, its stock has surged by approximately 53%. Moreover, Dollarama has delivered a compound annual growth rate (CAGR) of about 22% over the last five years, translating into a staggering capital gain of about 170%. Besides delivering solid capital gains, Dollarama has increased its dividend payments 13 times since 2011, reflecting its commitment to rewarding investors.
Dollarama is well-positioned to maintain its growth trajectory. Its low pricing, extensive footprint across all Canadian provinces, focus on direct sourcing, and operational efficiency are expected to drive its top and bottom lines and, in turn, its share price.
Aritzia
Aritzia (TSX:ATZ) stock deserves a spot in your portfolio for its ability to deliver above-average returns. The luxury clothing company has consistently delivered impressive sales and earnings growth, which has driven its share price higher.
For example, Aritzia’s net revenue has grown at a compound annual growth rate (CAGR) of 19% since fiscal 2016. Moreover, its adjusted net income has increased at a CAGR of 13% during the same period. Thanks to its impressive financials, Aritzia stock is up over 79% in one year. Further, its stock has grown at a CAGR of 19.2% in the last five years, delivering a capital gain of 141%.
Looking ahead, Aritzia’s growth story is far from over. Aritzia’s net revenue is projected to continue expanding at a CAGR of 15 to 17% through fiscal 2027. The clothing retailer’s strategic initiatives, including opening new boutiques, expanding its omnichannel offerings, and enhancing brand awareness will likely support its growth. Additionally, Aritzia’s investments in supply chain improvements, advanced technology, and targeted marketing efforts will likely bolster its growth and support the upward trajectory of its share price.
The bottom line
Investing in Canadian stocks like Dollarama and Aritzia offers solid opportunities for significant capital appreciation and consistent income. Both companies have demonstrated strong financial performance, with a track record of impressive returns and growth, making them solid choices for investors looking to maximize returns on a $1,000 investment. As these companies continue to expand, their potential for delivering substantial long-term gains remains strong.
