Stocks are known for outperforming most of the other asset classes and generating massive returns in the long term. Therefore, one must consider investing in fundamentally strong companies to achieve long-term financial goals faster and with ease.
It’s important to highlight here that when investing for the long term, one must look for companies with multiple growth catalysts and the ability to grow their revenues rapidly. Further, these corporations must have a growing earnings base or can soon achieve sustainable profit. With this backdrop, let’s look at five Canadian stocks that are my top picks for outperforming the broader markets.
Lightspeed
Lightspeed (TSX:LSPD) is an attractive stock near the current levels set to deliver massive returns. While the stock is trading incredibly cheap, it continues to produce high recurring or reoccurring revenues. Impressively, Lightspeed’s GTV (gross transaction value) is growing at a breakneck pace (at a compound annual growth rate, or CAGR, of 57% since 2019), while the company is well positioned to benefit from the ongoing digital transformation and increased spending on technology to modernize legacy POS (point-of-sale) platforms.
Lightspeed is streamlining its operations, focusing only on two core products, and targeting high GTV customers. These measures will drive the adoption of its multiple software modules, reduce churn, and lead to higher average revenue per user. Also, its focus on accretive acquisitions augurs well for future growth.
Aritzia
Aritzia (TSX:ATZ) stock is another compelling long-term bet. The solid demand for its offerings, continued strength in the e-commerce business, and attractive sales mix supports its top- and bottom-line growth. While the firm faces near-term sales and margin headwinds, it reiterated its medium-term revenue growth outlook, which is positive.
Aritzia’s top line is projected to increase at a CAGR of 15-17% through 2027. At the same time, its earnings growth is expected to outpace sales. Overall, solid demand, new boutique openings, expansion of boutiques in high-growth markets, and improving sales mix position it well to outperform the broader markets.
goeasy
goeasy (TSX:GSY) is one of my top picks to generate a considerable amount of wealth in the long term. The financial services company offers loans to subprime borrowers and has consistently delivered double-digit sales and earnings growth over the past several years. Impressively, the momentum in its business will likely sustain in the coming years, which will drive its stock price higher.
The company’s financials will likely benefit from the large non-prime lending market, high-quality loan originations, stable credit performance, and operating leverage. Notably, goeasy stock has appreciated quite a lot over the past five years. Nonetheless, it has more room to run, considering its low valuation and high growth. Further, the company’s shareholders will likely benefit from higher dividend payouts.
WELL Health
WELL Health (TSX:WELL) is a digital healthcare company that has managed to turn profitable quickly. It consistently delivers robust revenue growth despite economic reopening, reflecting its ability to drive omnichannel patient visits. Management remains upbeat and expects the momentum to sustain in the coming years.
Its accretive acquisitions and investments in AI (artificial intelligence) augur well for future growth. Furthermore, strength in its high-margin virtual services business is positive. The stock looks attractive on the valuation front and has the potential to deliver explosive growth.
Cargojet
Leading air cargo services provider Cargojet (TSX:CJT) could be a solid addition to your portfolio. Thanks to its diversified revenue base, growing e-commerce penetration, and partnerships with top logistics companies, the company remains well positioned to drive its revenue and earnings at a solid pace.
In addition, its next-day delivery capabilities, long-term contracts, cost optimization, and opportunities in the international market bode well for growth. Cargojet is also expected to benefit from its high retention rate and ability to expand its customer base.
