Last year was exceptional for Canadian equity markets, with the S&P/TSX Composite Index surging more than 28%. Interest rate cuts, improving corporate earnings, and strong commodity prices fuelled the rally. The momentum has carried into the current year, with the index up over 4% year to date. Amid rising investor optimism, let’s take a look at two high-quality TSX stocks that are well-positioned to sustain their upward trajectory in the years ahead.
Shopify
Shopify (TSX:SHOP) provides critical internet infrastructure that enables businesses worldwide to start, operate, and scale. Supported by strong quarterly performance, the company delivered a solid 44.5% return last year. In its most recently reported third quarter, Shopify posted robust growth across key metrics, with gross merchandise value (GMV), revenue, and operating income rising by 32%, 24.4%, and 21.2%, respectively. Meanwhile, free cash flow increased 20.4% to $507 million, although the free cash flow margin declined marginally from 19% to 18%.
Looking ahead, the growing adoption of omnichannel commerce presents a significant long-term opportunity to expand Shopify’s addressable market. The company is also helping small- and medium-sized businesses navigate an increasingly complex global regulatory environment, further strengthening its value proposition and deepening merchant relationships.
At the same time, Shopify continues to invest in innovation, launching solutions that enhance product discovery, streamline the purchasing experience, and improve the post-purchase journey. Strategic partnerships with leading artificial intelligence (AI) companies are enabling the development of advanced tools tailored to merchants’ evolving needs.
Alongside these growth initiatives, Shopify is focused on improving operational efficiency through greater automation and deeper AI integration, which could support sustained profitability expansion. Given these multiple growth drivers, Shopify appears well-positioned to deliver further share price appreciation over the long term.
Dollarama
Dollarama (TSX:DOL) is a leading discount retailer operating 1,684 stores across Canada and 401 stores in Australia. The company also owns a 60.1% stake in Dollarcity, which operates 683 stores across five Latin American countries. Supported by strong operating performance, the Montreal-based retailer delivered an impressive 46.6% return last year. In the recently reported third quarter, revenue and earnings per share (EPS) increased by 22.2% and 19.4%, respectively. Store network expansion, including the net addition of 81 locations, healthy same-store sales, and contributions from the recently acquired The Reject Shop in Australia, drove its financials.
Looking ahead, Dollarama plans to expand its Canadian store base to 2,100 locations by the end of fiscal 2034 and its Australian footprint to 700 stores. Supported by its efficient, capital-light business model, rapid sales ramp-up, short payback periods, and relatively low maintenance capital expenditure requirements, these expansions could drive meaningful growth in both revenue and earnings. In addition, management is actively evaluating initiatives to streamline operations at The Reject Shop, which could further enhance profitability and accelerate growth in the Australian business.
Dollarcity also has ambitious growth plans, aiming to reach 1,050 stores by the end of fiscal 2031. Furthermore, Dollarama has the option to increase its ownership stake in Dollarcity to 70% by the end of next year, which could significantly increase Dollarcity’s contribution to Dollarama’s net income in the years ahead. Alongside these growth opportunities, Dollarama has consistently rewarded shareholders, raising its dividend 14 times since 2011, and currently offers a forward dividend yield of approximately 0.22%. Considering these factors, Dollarama appears well-positioned to continue delivering healthy returns in the years ahead.
