For most investors, the search for generational wealth is one that is worth embarking on. Via investing in a range of assets including equities, it’s been proven time and again that generating significant real returns that can beat inflation over the long term is possible. Of course, the issue is knowing which individual stocks or funds may be best-suited for those with such a time horizon.
Here are three of my top Canadian picks for investors looking to accomplish the generational wealth and financial security over time.
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Shopify
Among the best growth stocks Canada has to offer, Shopify (TSX: SHOP) is a world-class e-commerce leader providing some of the most important technology in the marketplace right now.
The company’s core e-commerce platform powers millions of businesses in their ability to operate efficient and profitable online shops. For investors who believe that e-commerce will continue to dominate the retail landscape, Shopify remains my preferred way to play this sector.
Given the company’s recent revenue and earnings beats, investors are betting on growth maintaining at current levels or picking up over time. I think that assessment is fair, and justifies the company’s premium multiple. Of course, plenty will need to go right in order for Shopify to continue to double over the course of time, but I’m an optimist in this case.
Kinaxis
Shares of Kinaxis (TSX: KXS) have traded within a relatively narrow band over the past five years, and are actually down over this period. That doesn’t make a bullish case on its face, though I think investors and the market more broadly may be discounting this company’s growth potential at their peril.
The supply chain software maker has been integrating artificial intelligence within its portfolio of products to ramp up growth. In recent quarters, the company has seen solid growth, with an order backlog for its AI solutions increasing at an impressive rate.
Now, Kinaxis is one of those companies with a premium multiple, so some investors may believe that much of the future growth arising from these integrations is already baked in. That’s fair, and something to consider.
That said, if AI is as big as everyone claims, this is a top growth stock I think investors shouldn’t sleep on right now. With solid earnings and cash flow growth potential, I think any purchase price below the $150 level will turn out to be a very profitable one long term.
Toronto-Dominion Bank
The last growth stock pick on this list is a company many investors may not thing of as a growth play. That said, I’m of the view that Toronto-Dominion Bank (TSX: TD) could be one of the best such options for investors seeking both capital appreciation and dividend income over time.
Yes, TD stock does come with a 3.3% dividend yield, and that’s a big piece of the company’s investing thesis. However, the company’s growing retail footprint and ability to accelerate its revenue and earnings growth over time via technology and innovation makes this big Canadian bank stand out from its peers.
I think TD has among the most robust balance sheets of its peers, along with one of the best growth profiles in this sector. Accordingly, the company’s premium multiple is warranted, as I expect margin expansion will continue over the course of the coming year. As the yield curve continues to steepen, TD’s net interest income could get a big boost, and we could see this stock accelerate even higher.
That’s my base case, at least.
