In the 2010s, investors enjoyed a sustained bull market following one of the most destructive financial crises in the modern era. Now, in 2020, investors are facing a devastated economy and a market that quickly went on the mend following an early spring collapse. Today, I want to discuss how Canadians can turn a few thousand into six figures over the course of a decade.
Canadians: Tech is a big winner
In previous articles, I’d discussed how the TSX has been maligned for its lack of options in the technology sector. There are still some fantastic options that have made fortunes in recent years. Constellation Software (TSX:CSU) is engaged in the development, installation, and customization of software around the world.
Shares of Constellation Software have climbed 29% in 2020 as of early afternoon trading on July 9. The company has carried forward a high level of debt. However, it has made up for this with impressive earnings growth over the years.
Many Canadian and global companies are looking to bolster their digital footprint. The COVID-19 may have spurred on a revolution when it comes to working from home.
A $1,000 investment in Constellation Software in the beginning of the 2010s would have been worth $41,600 on December 31, 2019. The stock has continued its strong performance in 2020.
Can Air Canada put together another big decade?
Air Canada (TSX:AC) is the largest domestic airline in Canada. The COVID-19 pandemic has wreaked havoc on the industry. Fortunately, restrictions on the sector have eased into the summer.
On July 1, Air Canada announced that it would no longer move forward with seat distancing. Regardless, the industry is still facing headwinds emerging from this historic crisis.
Shares of Air Canada have dropped 65% in 2020 so far. Canadians who are looking for discounts should keep their eyes on Air Canada. The stock had a brutal start to the 2010s as the airline industry was reeling following the Great Recession. Since then, it has managed to greatly improve its balance sheet and is positioned to weather this turbulent period.
A $1,000 investment in Air Canada stock at the beginning of the 2010s would have been worth $37,800 at the end of the decade. Today, shares of Air Canada possess a solid balance sheet and a favourable price-to-book value of 1.1.
Will cannabis make Canadians rich again?
The cannabis sector gobbled up investor attention after the liberal election victory in 2015. Prime Minister Justin Trudeau delivered his promise to legalize recreational cannabis use. However, the results on the ground have been uninspiring. Many Canadians have lost faith in the sector.
Aurora Cannabis (TSX:ACB)(NYSE:ACB) is the largest cannabis producer in the country. Its shares have dropped 50% in 2020 so far. Cannabis sales have enjoyed an increase during the COVID-19 pandemic. However, the turnaround may not be substantial enough to renew faith in Aurora or its peers.
A $1,000 investment in Aurora to start the 2010s would have been worth $28,600 as at December 31, 2019. Canadians should keep an eye on any legislative progress south of the border.
However, current President Donald Trump and his challenger Joe Biden have shown no compulsion to pursue federal legalization, which could well keep cannabis stocks in a rut for a while.
Instead, investors may want to turn to promising sin stocks like Great Canadian Gaming or Corby Spirit and Wine.
