The decade of 2020-2030 has so far been full of surprises — some good and some bad. Every alternate year, economies are seeing drastic changes in policies, geopolitical environment, and technological developments. Many cyclical stocks have given handsome returns to investors, while some have wiped away the wealth generated. This created an emergence of booking profits when the opportunity came instead of investing in the stocks and forgetting about them.
For instance, a buy-and-forget stock like Suncor Energy is a sell right now. It rallied to a 15-year high amid geopolitical tensions in oil-rich countries. And now, a possible trade war with its biggest customer, the United States, risks the share price dropping to the 2021 levels of $25 from $54.7 at the time of writing the article.
Knowing that the market is volatile doesn’t mean you sit on a pile of cash and miss out on the opportunities that still exist. Some resilient growth stocks generated 20% compound annual growth rate (CAGR) returns.
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Two growth stocks that could turn $10,000 into $24,800 by 2030
A 20% CAGR can convert a $10,000 investment into $24,800 in five years. The CAGR averages the dip and rally and gives an average return in a year, compounded over a given period.
Descartes Systems
Descartes Systems (TSX:DSG) stock has generated a CAGR of 22% in the last five years, from February 2020 to February 2025. In these five years, the stock saw a two-year stagnation from December 2021 to October 2023. It also saw two major dips of 28-35% during the March 2020 pandemic crash and the 2022 tech stock meltdown. However, a slowdown or a dip followed a strong recovery rally as Descartes’s revenue and profits continued to grow in every scenario.
Descartes provides supply chain and logistics solutions to various companies across different verticals. The geopolitical challenges presented an opportunity for Descartes to help companies smoothen their trade. The looming trade war presents another opportunity to offer customs and global trade intelligence solutions.
A $10,000 investment in Descartes on February 4, 2020, when the stock was at its peak, is now worth $27,112. If you’d invested in the pandemic dip just a month later, your investment would be worth $38,000. In a month, you lost $11,000 in opportunity.
This is not just the case with 2020. You can back-test the historic price data and notice that the stock has maintained an 18-20% CAGR in five years. You could consider investing in Descartes’s stock at the current price or when it dips, as the recovery rally could give you a 20% CAGR by 2030.
Constellation Software stock
Constellation Software (TSX:CSU) uses the power of compounding to its benefit. The company has consistently grown revenue and earnings per share (EPS) at a CAGR of 17.5% and 18.5%, respectively, in the last 10 years. Constellation acquires vertical-specific software companies that are mission-critical and generate stable cash flows. Reinvesting the acquired cash flow to grow through acquisitions has helped Constellation keep its debt low and liquidity high.
The acquired companies operate individually. Constellation offers management consulting and networking support if required. This helps Constellation generate 2-3% organic growth and the rest of the growth through acquisitions.
There have been periods where Constellation’s EPS declined. Its FY21 EPS fell 29% year over year as a tech stock rally made its acquisitions expensive. However, the company benefited from the 2022 tech bubble burst as it could acquire companies at attractive prices. Staying disciplined and consistent has helped Constellation grow its stock price at a five-year CAGR of 27%.
A $14,700 investment in Constellation on February 4, 2020, converted to $33,740. It has the potential to generate 20% CAGR by 2030. Even if you buy two shares of Constellation, they could generate strong returns.
