I’m a long-term investor by nature, so I look for undervalued opportunities in any market environment I can see growing substantially over a very long period of time. The good news for investors is that there are pockets of such opportunities available right now, with a number of stocks with excellent underlying growth seeming to be discounted en masse by investors.
For those looking to dive into two Canadian growth stocks with 10 times potential over the next decade or so (I think in decade-long increments), here are two of my top picks for such investors right now.
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Brookfield Asset Management
In terms of the most compelling long-term growth opportunities in the market, Brookfield Asset Management (TSX:BAM) continues to be a top pick of mine.
The company sits at the intersection of several powerful structural trends. Most notably, I think the surging demand we’re seeing for AI-driven data infrastructure, grid modernization, and the ongoing shift from public to private markets is worth noting. Today, Brookfield manages roughly US$600 billion in fee-bearing capital, with approximately 87% of this base locked in as long-term, permanent, or perpetual capital. This model provides excellent visibility into future cash flows and fee growth for investors.
Furthermore, this capital-light, fee-centric model means incremental dollars of assets under management drop through to earnings at very attractive margins, giving Brookfield substantial operating leverage as it scales. What that means is that Brookfield’s recent 15% dividend increase underlines management’s confidence in both near-term cash generation and long-term earnings power.
At the same time, the market still tends to value the stock more like a traditional asset manager than a uniquely positioned, global alternatives franchise that monetizes some of the largest capital investment cycles of our time. That disconnect creates an opportunity for patient investors willing to look out five to ten years.
For those seeking sustainable double-digit growth in fee-related earnings and distributable cash flow (and are comfortable with some cyclicality in capital markets), Brookfield offers a rare combination of quality, growth, and income that could meaningfully compound a six-figure portfolio over the next decade.
Shopify
Last, but certainly not least, we have perhaps my favourite long-term TSX growth pick to discuss – Shopify (TSX:SHOP).
Shares of Shopify stock have performed relatively well in recent years, though this stock has been on a downturn of late. Much of that has to do with the recent turmoil around software names. With various AI applications driving fear among many in the market, we could see major disruptions for companies with business models like Shopify.
The reality is, though, that Shopify has built up one of the most robust growth franchises Canada has ever seen. Providing mission-critical e-commerce infrastructure to businesses of all sizes, the company has turned into a cash flow-generating machine. Anchored by a robust recurring revenue model (subscriptions and merchant solutions continue to be the largest and fastest-growing pieces of the Shopify empire), there’s a lot to like about how steady the company’s growth has been in recent years, with some acceleration on certain metrics.
My thesis around Shopify is relatively simple. As the pie continues to expand for e-commerce (which will continue taking share from traditional bricks-and-mortar retail), this is a stock that has incredible scalability and capital appreciation potential. As the company continues to deliver more value to shareholders in the form of buybacks (another US$2 billion buyback program was announced earlier this year), I think this is one of those stocks investors would do well to pay attention to.
Simply put, on this recent dip, Shopify stock looks like a screaming buy to me.
