The Canadian stock market has no shortage of growth-oriented stocks that can be excellent holdings to consider for your self-directed portfolio. It’s just that the market environment right now does not exactly seem like it is conducive to investing in growth stocks. Investors targeting outsized returns and with the patience to wait to achieve them have some opportunities waiting in the market.
While there is never a guarantee that a stock can triple your investment, some have the kind of growth runway showing that it is possible. Today, I will discuss three fundamentally solid TSX stocks that can outperform the rest of the market by significant margins in the next few years.
Source: Getty Images
Aritzia
Aritzia Inc. (TSX:ATZ) is a fashion retailer that might not look like an essential holding, especially amid a harsh economic climate, but it has been performing like one. The $16.5 billion market-cap company has several luxury brands under its belt, a loyal customer base, and steady demand for its products. The company has expanded across brick-and-mortar stores and grown its online sales, thanks to its ability to maintain exclusive brands and continuously introduce fresh styles that strengthen consumer engagement.
Growth prospects remain solid as it continues to expand online and opens new boutiques across North America. With the potential to more than double its presence south of the border, it is well-capitalized enough to weather the storm and achieve greater long-term growth.
CES Energy
CES Energy Corp. (TSX:CEU) is another compelling investment that can provide substantial long-term gains to investors. The $3.8 billion market capitalization company is a critical player in the Canadian energy industry. It is not a crude oil producer itself, but the consumable chemical solutions it provides are crucial to the industry’s success.
Energy producers rely on its products to improve oil and gas production efficiency, improve the performance of their wells, and protect important infrastructure. The company’s business model lets it generate strong recurring revenue, making its earnings predictable. As producers intensify output from existing wells, the demand for its specialized solutions keeps growing. I think it can be a good investment at current levels.
Bird Construction
Bird Construction Inc. (TSX:BDT) is a $2.8 billion market-cap investment holding company that provides construction services. This stock provides investors with exposure to the industrial and infrastructural growth cycle in Canada. It serves both private and public sector clients across several industries, including utilities, transportation, power, and mining.
There is consistent demand for its services. BDT stock has a massive backlog that sets itself up for a strong base for earnings and revenue growth. Near-term volatility might weigh on its share prices, especially amid the tense geopolitical landscape. That said, its approach to project selection and use of collaborative contracts give it the ability to improve its bottom line once the dust settles. It can be a solid investment to consider right now.
Foolish takeaway
Companies with strong underlying fundamentals and businesses that have enough resilience to weather cyclical pressures in the stock market can be excellent long-term winners. Aritzia stock, CES Energy stock, and Bird Construction stock have the potential to triple over the next five years. While not without risks, these three can be good holdings to consider for your self-directed portfolio.
