Investors aiming to build enduring wealth should look for fundamentally strong stocks capable of consistently outperforming the market over the long term. Moreover, they should focus on diversifying their portfolios to reduce risk.
Against this backdrop, let’s look at four Canadian stocks that are my top picks for investors seeking enduring wealth in the coming years. These stocks have solid growth potential and will likely generate above-average returns in the upcoming years.
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goeasy
Shares of financial services company goeasy (TSX:GSY) are a must-have to build enduring wealth. Thanks to its solid financials, goeasy stock has consistently outperformed the broader equity markets with its returns.
For example, goeasy stock has gained over 56% in one year, 305% in five years, and about 900% in the past decade. Besides delivering massive capital gains, goeasy stock enhanced its shareholders’ value with higher dividend payments.
The momentum in goeasy’s business will likely sustain, driving its stock price higher. Its leadership in Canada’s subprime lending, large addressable market, increasing geographical footprint, diverse funding sources, and new product launches will drive its top line. Meanwhile, higher sales, solid credit underwriting capabilities, steady credit performance, and operating efficiency will help goeasy deliver double-digit earnings growth, boosting its share price and supporting higher dividend payments.
Aritzia
Aritzia (TSX:ATZ) is another compelling stock with the potential to deliver stellar returns over the long term. Shares of this luxury clothing company have appreciated about 90% in one year. Despite the significant move, the momentum in Aritzia stock is likely to continue due to its ability to deliver stellar sales and earnings growth.
Notably, Aritzia’s net revenues have increased 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. The company’s management expects net revenue to expand at a CAGR of 15 to 17% through fiscal 2027, which will cushion its earnings and drive its stock price higher.
The clothing retailer is taking initiatives to boost its revenues. The company is opening new boutiques, expanding its omnichannel offerings, and enhancing brand awareness, which will drive its sales. Additionally, Aritzia’s investments in technology, supply chain improvements, and targeted marketing efforts augur well for growth and support the upward trajectory of its share price.
Dollarama
Dollarama (TSX:DOL) is a discount retailer offering products at low and fixed prices. This approach attracts a diverse customer base, driving steady sales even amid economic downturns. Its low-risk business model and value-pricing strategy will likely fuel its earnings, ensuring solid capital gains and steady dividend income for investors.
Dollarama stock has jumped over 173% in the past five years and grown at a compound annual growth rate of about 22% in the same period. In addition to stock appreciation, Dollarama has increased its dividend payments 13 times since 2011, reflecting its commitment to rewarding shareholders.
Its extensive store base across all Canadian provinces, low pricing, and wide product assortment are likely to drive revenue growth. Further, its direct sourcing and operational efficiency are expected to boost earnings, drive higher dividend payments, and fuel the share price.
Celestica
Celestica (TSX:CLS) is a solid long-term bet. Shares of Celestica, which provides supply chain solutions, have rallied over 698% in the past three years. Despite this massive rally, the stock has significant upside potential, implying it is a buy on the dip.
The company is set to benefit from its exposure to high-growth sectors such as artificial intelligence (AI), which is expected to provide a solid base for future growth.
The large investments in data centre infrastructure of the company’s hyperscale customers and solid demand for its hardware platform solutions will likely support Celestica’s revenue and earnings. In addition, the continued momentum in its Aerospace and Defense revenue, led by commercial aerospace and new program ramps in defence, is positive and will likely support its growth.
