Investors can create substantial wealth by investing in high-growth stocks. These companies invest in developing new products and services that help in growing their financials at a superior rate and also strengthen their positions. Therefore, these companies can deliver exceptional long-term returns.
Meanwhile, investors should grow their investments at an annualized return of 17.5% over 10 years to earn fivefold returns. Against this backdrop, let’s look at two stocks that have the potential to deliver fivefold returns over the next 10 years.
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Shopify
Shopify (TSX: SHOP) provides essential internet infrastructure to enterprises worldwide, enabling them to start or scale their businesses. The company has grown its financials at a healthier rate over the last 10 years, delivering impressive returns of over 4,000% at an annualized rate of 45.2%. Meanwhile, I expect the uptrend in the company’s financial performance to continue, driven by the rapid adoption of the omnichannel selling model and its geographical expansion.
The ongoing trade war has created challenges for small- and medium-sized enterprises. However, Shopify has introduced new features, such as product filtering by country, duty calculation, and shipping management, that can help these businesses conduct cross-border trade. Additionally, the company has expanded its payments platform to 39 countries by the end of the first quarter. It has also introduced multicurrency payouts in 20 European countries, allowing merchants to accept payments in multiple currencies. These payment platforms help streamline onboarding processes, enhance security, boost conversion rates, and lower fees.
Additionally, Shopify is investing in artificial intelligence (AI) to develop innovative products that enhance user experience, improve production capabilities, and drive operational efficiencies. The company also acquired Vantage Discovery in March, which could help accelerate the development of AI-powered search features. Considering all these factors and its solid financial performance in the recently reported first-quarter earnings, I expect Shopify to continue driving its financials at a healthier rate, thereby delivering superior returns.
Celestica
Another Canadian stock with the potential to deliver superior returns over the next 10 years is Celestica (TSX: CLS), which offers reliable design, manufacturing, and supply chain solutions across various sectors. Supported by its exposure to the high-growth AI market and solid financial performance, the company has returned 68% this year and 1,600% over the last three years.
In the recently reported first-quarter performance, the company’s top line grew 20% to $2.65 billion. The Connectivity and Cloud Solutions division experienced a 28% sales growth, driven by solid performance from its Hardware Platform Solutions segment, which generated $1 billion in revenue, representing a 99% year-over-year increase. Its other division, Advanced Technology Solutions, also witnessed a 5% increase in its sales. Supported by revenue growth, expansion of operating margins, and share repurchases, its adjusted earnings per share increased by 44.6% to $1.20.
Meanwhile, hyperscalers continue to increase their investments in expanding AI infrastructure, which has raised the demand for Celestica’s storage, compute, and networking products. Moreover, the company is developing innovative products to meet the growing needs of its customers and strengthen its position. Despite its solid returns, the company trades at an attractive next-12-month price-to-sales multiple of 1.6, making it an excellent long-term buy.
