Long-term investing is one of the most effective strategies for building wealth. It allows investors to benefit from compounding while reducing the impact of short-term market volatility. In addition, a long-term approach requires less frequent portfolio monitoring and lowers transaction costs by minimizing trading activity.
To grow a $100,000 investment into $1 million over 20 years, investors would need to generate an annualized return of approximately 12.2%. Against this backdrop, let’s look at three high-quality stocks that could help investors build a $1 million portfolio over the next two decades.
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Celestica
Celestica (TSX: CLS) is one of the top stocks that I believe has the potential to generate outsized returns over the long term. The electronic manufacturing services (EMS) company is well-positioned to benefit from the rapid expansion of the artificial intelligence (AI) market.
As businesses, governments, and consumers increasingly adopt AI technologies, demand for computing power continues to rise, prompting hyperscalers to invest heavily in AI-ready infrastructure. This trend has created significant long-term opportunities for Celestica, a key supplier of networking and hardware solutions for data centres and AI infrastructure.
To capitalize on this favourable environment, Celestica continues to introduce new products and expand its manufacturing capabilities, including a new facility in Fort Worth, Texas. These initiatives should strengthen its competitive position and support future financial growth.
For this year, management expects revenue and adjusted earnings per share (EPS) to increase by 53.3% and 67.8%, respectively, while operating margin could expand by 60 basis points to 8.1%. Supported by favourable industry trends and its ongoing growth initiatives, I believe Celestica is well-positioned to deliver substantial long-term value to shareholders.
Dollarama
Another stock I believe has the potential to deliver impressive long-term returns is Dollarama (TSX: DOL), a discount retailer operating 1,719 stores in Canada and 410 in Australia. The company has adopted an efficient direct-sourcing model, strengthening its bargaining power and reducing intermediary costs. Combined with its streamlined logistics network, Dollarama’s efficient business model keeps operating expenses low and allows it to offer a wide range of products at attractive price points. Thanks to this compelling value proposition, the retailer continues to generate healthy same-store sales growth across various economic environments.
Dollarama also continues to expand its store network and expects to increase its footprint to 2,200 stores in Canada and 700 in Australia by the end of fiscal 2034. In addition, the company is constructing a new distribution centre in Calgary, expected to become operational by the end of next year. This facility should enhance supply chain efficiency and support future growth across Western Canada.
Meanwhile, Dollarama also owns a 60.1% stake in Dollarcity, which operates 752 discount stores across Latin America. Dollarcity’s contribution to Dollarama’s earnings could continue to grow as it pursues plans to expand its store count to 1,050 locations by the end of fiscal 2031. Furthermore, Dollarama retains the option to increase its ownership stake to 70% by the end of next year.
Supported by its resilient business model, attractive value proposition, and multiple growth drivers, I believe Dollarama is well-positioned to deliver strong long-term returns for shareholders.
Savaria
My final pick would be Savaria (TSX: SIS), which offers a broad range of accessibility and mobility solutions for individuals with physical limitations. Supported by its extensive manufacturing footprint and established global distribution network, the company markets its products and services worldwide.
The growing aging population continues to create a powerful long-term tailwind for Savaria’s business. To capitalize on this opportunity, the company is investing in product innovation, expanding its manufacturing capabilities, improving operational efficiency, and pursuing strategic acquisitions to broaden its market reach and strengthen its competitive position.
Reflecting these opportunities, management expects revenue to grow at an annualized rate of 12% to reach $1.6 billion by 2030, while maintaining an adjusted EBITDA margin (earnings before interest, taxes, depreciation, and amortization) above 20%.
Despite these attractive growth prospects, Savaria trades at a reasonable price-to-sales multiple of 2.1 and offers a monthly dividend with a forward yield of 1.9%. Considering its strong financial performance, favourable long-term growth outlook, and attractive valuation, I believe Savaria is an excellent choice for long-term investors.
