Growth stocks often deliver above-average returns, making them solid investments for building long-term wealth. However, they can also be volatile and carry higher risk. To mitigate this, investors should focus on diversifying their portfolios with fundamentally strong growth stocks that have the potential to outperform benchmark indices.
So, if you have $3,000, here are three Canadian stocks with strong growth prospects to buy and hold forever.
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Growth stock #1
Aritzia (TSX: ATZ) is one of the top growth stocks Canadian investors could consider buying and holding for the long term. The clothing retailer has consistently delivered double-digit sales and earnings growth, which has helped it generate solid returns over time.
Since fiscal 2016, Aritzia’s net revenues have grown at a compound annual growth rate (CAGR) of 19%, and its adjusted net income has increased at a CAGR of 13%. Aritzia stock has gained about 89% in a year, and the upward trend will likely continue. Its exclusive mix of fashion brands, new product offerings, expanding customer base, and improvement in the supply chain positions it well to deliver significant growth in the coming years.
Aritzia is focused on new boutique openings, expanding its store presence primarily in the U.S., and increasing brand awareness. These factors will likely boost revenues and generate steady growth. Moreover, the expansion of its omnichannel capabilities and efforts to reduce warehousing costs will likely increase its sales and profitability, supporting its share price.
Growth stock #2
Investors seeking growth stocks could consider CES Energy Solutions (TSX: CEU). The company provides advanced chemical solutions for the oilfield industry. Thanks to its exposure to all significant U.S. basins and higher demand, CES Energy stock has risen over 171% in one year and over 351% in three years.
Looking ahead, the demand for its specialized solutions will likely be sustained due to the growing complexity of the oil and gas extraction process. Notably, its advanced chemicals help maximize output and drive higher efficiency. Thus, these offerings are likely to witness solid demand as oilfield operators push for specialized techniques like longer lateral drilling, enhanced hydraulic fracturing, and pad optimization.
Additionally, CES Energy’s asset-light business model and recurring production chemical revenues position it to generate significant free cash flow across commodity cycles. The company’s strategic procurement strategy, favourable commodity prices, growing adoption of advanced chemical technologies, and steady upstream activity in North America provide a solid foundation for future growth.
Growth stock #3
TerraVest (TSX: TVK) is another compelling growth stock to buy and hold forever. Shares of this leading industrial manufacturer have increased over 173% in one year and over 898% in five years, outpacing the benchmark index by a significant margin. The company’s diversified portfolio and strong demand for its services have been driving its financials and share price.
TerraVest’s financials are expected to continue benefiting from the momentum in its service segment. The growing demand for compressed gas distribution equipment and residential and commercial petroleum tanks will further support its revenues and growth.
Moreover, its focus on accretive acquisitions, expansion of its product offerings, and opportunities in the international market are likely to generate incremental revenue and earnings further, boosting its share price. Moreover, its solid balance sheet, strong liquidity, and investment in improving manufacturing efficiency will help it pursue high-growth opportunities and increase shareholders’ value.
