Investing in growth stocks is a powerful strategy to create significant wealth over time. However, investors must consider fundamentally strong companies with solid growth prospects that can help deliver stellar returns over time. In addition, investors should consider diversifying their portfolios to reduce risk and enhance overall returns.
Against this backdrop, here are three growth stocks to buy and hold for the long term. These Canadian stocks are likely to deliver notable returns for the patient investor.
goeasy
goeasy (TSX:GSY) is a top TSX stock to buy now and hold forever. The company is a leader in Canada’s subprime lending sector. Its wide product range, omnichannel offerings, solid credit underwriting capabilities, and large addressable market helps the financial services company to consistently grow its revenue and earnings at an impressive double-digit rate.
Thanks to its solid financials, goeasy has consistently paid dividends for about two decades and uninterruptedly increased them for 10 consecutive years. Its steady performance has led to a surge in its stock price, which has outperformed the broader equity market with its returns. For instance, shares of goeasy have grown by over 278% in the last five years, delivering a CAGR of over 30%.
goeasy has the ability to continue to deliver solid double-digit growth in the coming years and further boost its shareholder value through higher dividend payments. Higher loan originations, geographical expansion, diversified funding sources, and stable credit performance will support its top and bottom-line growth. Moreover, the stock is undervalued. It trades at the next 12-month price-to-earnings (P/E) multiple of 10, providing a good buying opportunity for growth investors.
TerraVest Industries
TerraVest Industries (TSX:TVK) is another solid growth stock worth buying now. The company manufactures home heating products, natural gas liquids transport vehicles and storage vessels, propane, anhydrous ammonia, energy processing equipment, and fiberglass storage tanks.
The company has been performing well, reflected by its solid sales growth rate and stock price. Notably, TerraVest’s top line is up about 35% in the first nine months of 2024. This includes benefits from acquisitions, higher demand in the service segment, and growth in its compressed gas distribution equipment.
Thanks to its stellar financials, TerraVest stock has gained over 131% year-to-date and is up about 789% in five years. Despite the rally, the stock has more room for growth as it focuses on international markets, expands its product offerings, and enhances manufacturing efficiency. Given its solid balance sheet and ample liquidity, TerraVest could continue to capitalize on growth opportunities through acquisitions and enhance shareholder value through dividend payments.
Aritzia
Investors seeking high-growth stocks could consider Aritzia (TSX:ATZ). This clothing retailer has been consistently delivering impressive sales and profitability. For instance, since fiscal 2016, its net revenues have grown at a CAGR of 19%. Further, its adjusted net income grew at a CAGR of 13% during the same timeframe. Owing to its growing earnings and revenues, Aritzia stock’s value has increased by over 195% in the last five years, reflecting a CAGR of 24.2%.
Aritzia stock is expected to continue its upward trajectory in the coming years, as the company’s top line is set to increase by 15% to 17% per year through fiscal 2027. The company’s plan to open 8 to 10 boutiques in the U.S. annually through fiscal 2027 and increase the total retail square footage by up to 60% will likely boost its sales and earnings.
Further, its focus on its e-commerce business, integration of omnichannel capabilities, improvement in supply-chain efficiency, and operating leverage will likely accelerate its growth rate, bolster its earnings, and drive its stock higher.
