$20,000 can go a long way when you invest it wisely in Canadian stocks. $20,000 invested at a 10% compounded annual growth rate (CAGR) for 10 years could be worth as much as $52,000. That same amount at that same rate for 20 years would be worth as much as $134,000!
Hopefully you can find a diversified mix of stocks that can deliver these types of returns for a decade or two. If I was thinking about four Canadian stocks that could do that, here are some that look attractive today.
Source: Getty Images
A top Canadian transport stock
TFI International (TSX: TFII) has been a long-term compounder for shareholders. This Canadian stock is up 700% in the past 10 years for a 24% CAGR in that time.
TFI has built a freight and transport empire across Canada and the United States. The company has a focus on efficiency and cost management. This has maintained strong cash flows, even through some tough freight and economic environments.
Last quarter, it generated $202 million of free cash flow, which was an 11% increase over the prior year. TFI is starting to see an industry recovery, which means results could start to improve sequentially. As a result, now is a good time to add to the stock.
A top software stock
VitalHub (TSX: VHI) has perhaps had a shorter history of compounding. Over the past five years, this Canadian stock has compounded by a 22% CAGR. Given it is small-cap stock, it has potential for considerable returns ahead.
VitalHub provides essential care management and patient engagement software to the healthcare industry. Its focus is largely on public markets (like Canada, Australia, and the U.K.) where it has found niche in-roads to provide services.
In the past five years, it has grown revenues by a 34% CAGR and free cash flow by an 18.8% CAGR. It has consolidated several smaller software providers to diversify its product mix and geographic exposure.
This Canadian stock is down 36% in the past year due to concerns around AI disruption. The dip presents a reasonably attractive entry point for a stock that is delivering strong organic and acquisition growth.
A top services stock
Colliers International Group (TSX: CIGI) is another long-term compounder trading on the cheap. This Canadian stock has a 10-year history compounding by 10% CAGR.
Colliers has transformed in the past five years. It has become a diversified real estate services platform. While capital markets (property sales and leasing) remain an important part its business, it is growing player in engineering/project management and investment management.
Now, over 70% of its income is recurring. It has global scale, which amply diversifies its offering mix. For a company aiming to grow by 15% per annum, it remains fairly cheap at only 13 times forward earnings.
A top Canadian space stock
MDA Space (TSX: MDA) is another stock I am eyeing for an addition right now. This Canadian stock has compounded by 21% CAGR over the past five years.
Now it has been a rocky ride. This stock is volatile. However, its trajectory is up and to the right. MDA is global leader in space technologies. It has leading platform to develop and construct state-of-the-art satellites.
It also is winning its share of defence, geo-intelligence, and robotics contracts. We are only in the early innings of Canada’s defence spending splurge, so there are likely more contracts to come. Likewise, space expansion is only starting. This just means MDA continues to have huge opportunities in the long term.
For exposure to a cool theme at a reasonable price, MDA is an interesting stock to buy today.
