The smartest investors are not afraid to add quality Canadian stocks even when those stocks or the broader market have had a strong incline. Averaging up is a successful investment strategy that many investors don’t recognize. The fact is high-quality companies tend to spend much of their time close to 52-week highs.
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Keep adding to your winning stocks
When you invest in a high-quality stock, it means you are investing in a stock that has already won and should continue to win going forward. These businesses have strong balance sheets, great management teams, and excellent products/services that have large growth opportunities.
Long-term investors want to own stocks in businesses that consistently perform both as a business and as a stock. Long-term winners are likely to keep winning. If you are looking to add long-term buy-and-hold winners, here are three Canadian stocks to add in October.
Colliers: Still more upside ahead
Colliers International Group (TSX: CIGI) has many hallmarks of a long-term quality stock. Its stock has returned a 20% compounded annual total return over the past 10 years. Longer-term returns have been even better.
Colliers has used a market consolidation strategy to become a global commercial real estate services player. While it is best known for its commercial brokerage business, Colliers now has significant engineering, design, project management, and asset management businesses. Over 70% of its income comes from recurring services!
Real estate transaction activity has been weak for the past few years. However, with interest rates coming down, commercial real estate is starting to move. That will start to boost earnings for Colliers in the coming quarters.
Colliers is up 25% in 2024. However, with a stream of new acquisitions, it could continue to see great earnings growth in the years ahead.
Couche-Tard: A winning business makes a winning stock
There has been a lot of media attention around Alimentation Couche-Tard’s (TSX: ATD) attempt to acquire the 7-11 convenience chain. Unfortunately, the stock is down by almost 11% since.
It’s a large acquisition with a lot of risks, so the market is right to be concerned. However, Couche-Tard has an excellent record of operating and acquiring convenience-focused businesses. If the deal happens, Couche-Tard (if any company) could make it work. If it doesn’t happen, not much is lost.
Certainly, Couche-Tard has had a rough year as consumers (especially at the margins) have decreased their discretionary spending. The good news is that the M&A (mergers and acquisition) environment has improved, and Couche-Tard is starting to sweep up some accretive tuck-in deals in the long run. It just added another 260-store portfolio in the U.S. Midwest.
With the stock trading down for no good reason, it looks like a great time to add.
Trisura: An insurance up and comer
Trisura Group (TSX: TSU) is a quality stock set for a nice uptick in both operational and financial growth. Trisura operates a small but growing specialized insurance and re-insurance fronting platform. It has operations in Canada and the U.S.
Historically, Trisura stock has delivered exceptional growth (up 470% in the past five years). However, the stock has flatlined as its earnings caught up to its fundamental valuation.
Trisura’s valuation has become very attractive when compared to other specialty insurance peers. Likewise, the company has been making significant investments to start growing in the U.S., where it has substantial market opportunities. It might just be early innings before this stock takes off.
