Thanks to the pullback in top Canadian stocks, investors with long-term financial goals can accumulate stocks at prices well below their highs to create lasting generational wealth. But before investing for the long run, one should focus on stocks of companies with solid fundamentals, well-established businesses, a growing earnings base, and multiple growth catalysts.
With this theme in the backdrop, I’ll focus on three Canadian stocks that have generated multi-fold returns in the past, are trading at a discount, but have resilient businesses backed by profitable growth. Let’s begin.
A fast-growing financial services company
Speaking of stocks to create wealth, goeasy (TSX:GSY) tops my mind. Its stock has grown at a CAGR (compound annual growth rate) of more than 25% in the past decade. This growth comes despite the recent pullback in its share price on fear of a macro slowdown.
goeasy’s market-beating returns are backed by its stellar revenue and earnings growth. Notably, goeasy’s revenue increased at a CAGR of 20% in the past five years. At the same time, its earnings per share grew at a CAGR of 27%. Thanks to its impressive bottom-line growth, goeasy has rewarded its shareholders with higher dividend payments. The financial services company has increased its dividend in the last nine consecutive quarters and offers a yield of approximately 4%.
This subprime lender is confident of growing its top line at a double-digit rate. High-quality loan originations will likely drive its revenues and improve future credit quality. Meanwhile, its wide product base and omnichannel offerings augur well for top-line growth. Leverage from higher sales, solid credit quality, and improving efficiency will lead to double-digit earnings growth and support higher dividend payouts.
Thanks to the recent pullback, goeasy stock trades at a price-to-earnings multiple of 6.8, which is much below its historical average, providing an excellent buying opportunity.
A high-growth consumer stock
Like goeasy, Aritzia (TSX:ATZ) has consistently delivered double-digit sales and net income growth. Further, the stock has outperformed the TSX and grown at a CAGR of approximately 29% in the last five years.
While Aritzia stock delivered stellar returns, the company is poised to grow rapidly, which will likely support the uptrend in its stock price.
The strong demand for Aritzia’s products, its focus on expanding its boutiques in high-growth markets, and a favourable mix of full-priced sales will likely drive its financials and stock price. It expects its top line to grow at a CAGR of 15-17% through fiscal 2027. Meanwhile, its earnings are projected to grow faster than revenues, making it an excellent investment option to create wealth.
A top air cargo company
While pressure on consumer spending amid macro headwinds weighed on Cargojet (TSX:CJT) stock, the air cargo company remains well positioned to create significant wealth for its shareholders. Its next-day delivery capabilities and strong domestic network provides a competitive advantage over peers and drives demand. Further, its diversified revenue streams and partnerships with the largest logistics companies augur well for growth.
Cargojet is also likely to capitalize on growing e-commerce penetration and international growth opportunities. At the same time, its long-term contractual arrangements with minimum revenue guarantee and a very high customer retention rate could continue to support its top and bottom-line growth amid all market conditions.
Cargojet has witnessed a pullback, which makes its stock compelling near the current levels.
