Investing over the long term is an excellent strategy, as investors can benefit from the power of compounding while lowering the impact of short-term volatility. Meanwhile, investors should be careful when choosing stocks and invest in stocks with solid underlying businesses and healthy growth prospects. Against this backdrop, investors can buy the following three stocks, which have the potential to deliver multi-fold returns over the next 10 years.
Image source: Getty Images
Celestica
Despite delivering impressive returns of around 840% in the last two years, I expect Celestica (TSX:CLS) to continue its uptrend, given its exposure to the high-growth artificial intelligence (AI) market and continued innovation. The ongoing investment by hyperscalers in expanding AI infrastructure has created long-term growth potential for the company. Given its new product launches and continued innovation to meet the needs of its customers, the company is well-positioned to benefit from the expanding addressable market. Further, the company is also making strategic partnerships to strengthen its position in the HPS (hardware platform solutions) market.
Although its ATS (advanced technology solutions) segment has been under pressure over the last few quarters, the expanding defence budgets amid the ongoing geopolitical tensions and recovery in commercial air travel could support its growth in the coming quarters. Further, Celestica’s valuation also looks attractive, with its NTM (next-12-month) price-to-sales multiple at 1.2, making it an excellent buy.
Savaria
Second on my list is Savaria (TSX:SIS), which offers accessibility solutions to the elderly and physically challenged worldwide. The demand for accessibility solutions is rising amid the aging population and rising income levels, thus expanding Savaria’s addressable market. The company could benefit from this addressable market expansion amid its extensive product portfolio, worldwide manufacturing facilities, and solid dealer network.
Further, the company is progressing with its “Savaria One” initiative, which focuses on new product development, operational and production improvement, and enhancing procurement and supply-chain efficiencies. Amid these growth initiatives, the accessibility solution provider projects its top line to reach $1 billion this year while raising its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin to 20%. Despite its healthy growth prospects, Savaria trades at an attractive NTM price-to-earnings multiple of 17.6. The company also offers a monthly dividend, with its forward yield currently at 2.74%.
Shopify
My final pick is Shopify (TSX:SHOP), which offers commerce solutions to various businesses across 175 countries. The company has grown its financials at a healthier rate, with its topline growing above 25% for six consecutive quarters. Also, its free cash flow margin has expanded sequentially every quarter of this year. Supported by these solid financials, the company has returned 50.7% since the beginning of 2024.
Meanwhile, the growing adoption of omnichannel selling and geographical expansion have created long-term growth potential for the company. The e-commerce facilitator continues to launch innovative products to meet the growing needs of its customers, thus expanding its customer base. It recently introduced offline payment support, which ensures uninterrupted transactions even during network disruptions. The company has also introduced personalized offerings, gaining traction among mid-market customers. Amid these growth initiatives, I expect the momentum in Shopify’s financials to continue, thus supporting its long-term stock price growth.
