The best Canadian stocks to own for the long term are those that steadily and quietly compound value for shareholders. These are not always the flashiest businesses.
However, these Canadian stocks tend to have long-term managers, high quality products/services, resilient balance sheets, and extended runways for growth. If you can pick them up at cheap or fair prices, it is a bonus. If you are wondering what some of the top long-term, buy-and-hold Canadian stocks are, here are four top picks today.
Image source: Getty Images
A top Canadian serial acquirer stock
Constellation Software (TSX: CSU) has to be top of mind when thinking about long-term stocks. This Canadian stock has an incredible record of compounding total returns by about 30% a year.
Given its $95 billion market cap, similar future annual returns might be tricky to come by. However, even if its rate of compounding halved, shareholders could do well. A 15% compounded rate is a double every five years. Still not bad.
Constellation continues to be the best at what it does. It buys cheap, niche software businesses, turns them into cash cows, and re-invests into more businesses. Recent spinouts have been very successful and one can expect more of those to come in the years ahead.
For an exceptionally well-managed business with a great strategy, this is one of the best long-term stocks in Canada.
A leading real estate services provider
Colliers International (TSX: CIGI) is another great Canadian stock for the long term. This stock has compounded by a 16% rate over the past 20 years. Colliers has built out an impressive brand of commercial real estate service businesses across the globe.
Once only known as a commercial property broker, most of Colliers’ business today is recurring. It has property management, financing, engineering/advisory, and asset management platforms (on top of its commercial brokerage business).
Colliers has everything you want in a quality business. Its management team is highly invested and long-term owners. The commercial real estate expert has a leading brand that supports its operations and acquisition platform. This company is likely to continue a trajectory of doubling every five years for the foreseeable future.
A top Canadian transport stock
TFI International (TSX: TFII) has compounded total returns by a 23% rate in the past decade. This Canadian stock has used an industry roll-up strategy to deliver exceptional shareholder value. Today, TFI is one of Canada’s largest shipping and transport providers. It has a growing presence in the United States as well.
2024 was a tough year for TFI. A weak freight environment and some operational issues impacted results. Fortunately, the company continued to generate strong free cash flows. Likewise, it was able to make a nice mix of large and tuck-in acquisitions.
TFI has an exceptional CEO guiding the company. Patiently invest alongside him for the long haul and returns should continue to be good.
A fast-growing small cap stock
Canadian small cap stocks can be a great place to find long, enduring returns. One such stock on its early trajectory is VitalHub (TSX: VHI). The company has seen strong returns in the past few years. Its stock is up 300% in the past three years.
Last year, the company started to generate a significant amount of cash. Its business has hit a nice scale inflection point. The company has been making many customer wins that are supporting good organic growth. A strong balance sheet is also supporting ample acquisition activity.
This Canadian stock is not cheap today. However, if you pick it up on any weakness or pullbacks, you could do very well over the long term.
