When it comes to building wealth that lasts, some stocks simply stand out — not because they’re flashy or all over the headlines but because they deliver quiet, consistent performance year after year. If I had $7,000 to invest today and wanted to set it aside for decades, maybe even for future generations, there’s one Canadian stock I’d pick: Topicus.com (TSXV:TOI).
About Topicus
Topicus isn’t your typical growth company. Based in the Netherlands but listed on the TSX Venture Exchange, it specializes in acquiring and growing vertical market software businesses. That means it focuses on software companies that serve very specific industries. Think education, healthcare, public administration, and finance. These are areas where software becomes deeply embedded in operations, leading to high customer retention and recurring revenue. It’s the kind of model that quietly compounds wealth over time.
Topicus was spun out of Constellation Software in early 2021, and it follows a similar acquisition-focused playbook. But it has a more regional focus, with a growing presence across Europe. Since the spinout, it has been steadily snapping up niche software companies, integrating them into its decentralized structure, and encouraging them to keep growing. That strategy has worked incredibly well for Constellation, and Topicus appears to be on a similar path.
Numbers don’t lie
Let’s look at the numbers. In its most recent earnings report, Topicus posted revenue of €364.9 million for the fourth quarter (Q4) of 2024. That’s up 18% from the same quarter a year ago. Net income came in at €56.2 million, a 32% increase from Q4 2023. For the full year, revenue rose 15% to €1.29 billion, and net income jumped 30% to €149.5 million. These numbers show a business that’s growing both organically and through acquisitions, with solid control over costs.
It’s also worth noting that Topicus is very good at converting revenue into cash. In 2024, it generated €347.6 million in cash from operations, up 41% year over year. Free cash flow available to shareholders came in at €177.4 million, up 44% from 2023. That kind of cash generation gives it the flexibility to keep buying great businesses without relying on debt or issuing more shares.
More to come
What makes Topicus so compelling for long-term investors is how boring and beautiful the business really is. Most of the software companies it owns serve very specific, regulated industries. Their customers rely on them every single day, and switching software providers would be a hassle. That means revenue is sticky, margins are high, and churn is low. It also means that once Topicus buys a company, that company tends to keep paying off for years or often decades.
Now, the stock isn’t exactly cheap. As of writing, Topicus trades at about $172 per share, giving it a market cap of roughly $13.4 billion. But paying a premium for quality is often worth it when the business compounds value over time. And Topicus has proven it knows how to do that. Its return on invested capital is consistently high, and it’s reinvesting that capital in more businesses that meet its strict acquisition criteria.
Bottom line
So, why would I put $7,000 into Topicus today? Because it offers the kind of compounding machine that few companies can match. It has a stable cash flow, sticky customers, and a clear path for long-term expansion. It’s not trying to reinvent the wheel; it’s just steadily adding more spokes to it. And that’s exactly the kind of business you want when thinking about building wealth that lasts a generation or more.
