Different investors have different goals, and that makes writing broad-based pieces around investing themes difficult. Some investors are much more concerned with capital preservation than growth. Companies and assets that pay consistent and reasonable yields may be much more attractive to such investors than those that promise greater future growth.
That said, one of the key elements of long-term investing in the markets is benefiting from the capital appreciation upside equities provide. Without this growth, one could argue there’s no meaningful reason to own such equities.
The good news for Canadian investors is that there’s plenty of reason to believe the long-term growth trends we’ve seen play out will continue. Here are three considerations I think all investors should keep in mind, especially right now.
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Innovation and technological advancements won’t stop
Concerned about losing your job to an AI bot? Think that your industry could be at risk of disruption? There’s good reason to think this way.
Disruption is everywhere. And by most accounts, it’s a trend that’s only accelerating.
For those who don’t want to have their lives completely turned upside down by the next technological revolution (which is clearly underway), benefiting from the rise of AI and new technologies is possible by investing in the companies at the forefront of this revolution.
In the Canadian stock market, there happen to be a number of top companies worth considering on this front.
Economic resilience and earnings growth
Finding companies that have the potential to not only grow alongside the market but also provide market-beating growth is really the name of the game for growth investors. On that front, investors have to scour the TSX for the best opportunities.
That’s because many of the top Canadian blue-chip stocks investors often opt for do resemble steady, consistent options. Many of the top Canadian stocks have rock-solid balance sheets and reasonable dividend yields, but these attributes can come alongside slower growth.
Moving outside of the “traditional” bucket of Canadian stocks investors are used to can be difficult. But there are a number of top companies that exhibit the ability to be economically resilient (as was the case during the most recent tariff slump), while also continuing to grow through uncertain times. Those are the sorts of stocks growth investors should be after.
Ever-quicker shifts in market dynamics
Valuation multiples, growth rates, and plenty of other variables investors typically rely on to model out what a given stock is worth at a point in time are typically always in flux. Trying to pin down what a company should be worth based on its historical performance can be tricky.
Thus, I do think finding growth stocks with some semblance of stability is important. In this market that’s continuing to shift in an ever-quicker fashion, finding the companies investors can sleep well on while owning them is important. When we look at growth stocks, this idea is one I think is worth doubling down on.
