Although many investors focus on finding the cheapest stocks on the market, the best strategy is actually to focus on finding the highest quality companies on the market, whether they are Canadian growth stocks or dividend stocks. These are the types of companies that you can have confidence owning for the long haul.
When you focus on finding high-quality companies to buy when they are undervalued and hold them for years instead of constantly looking for the cheapest stocks on the market, not only can they earn you spectacular gains, but you have to find far fewer stocks to buy altogether.
So, the goal of investors should be to build a well-diversified portfolio of these high-quality businesses with years of potential. The best companies to own are typically ones that can weather the storm better in an economic downturn as well as grow rapidly and consistently over the long term.
And while there are several growth stocks for Canadian investors to consider adding to their portfolio today, here are three of the best to buy and hold for years.
One of the top tech stocks on the TSX
For years Shopify (TSX:SHOP) has been an impressive company, and although its stock has had its ups and downs in recent years, there’s no doubt it’s one of the best Canadian growth stocks you can own.
Technology continues to improve each day, and many sectors throughout our economy are seeing significant innovation as a result. The retail sector is no different, with e-commerce continuing to gain popularity amongst both consumers and businesses.
And one of the most dominant companies in the e-commerce space is Shopify. With Shopify powering the e-commerce stores of startups to medium-sized businesses, it’s well positioned to see significant growth for years to come.
Even as Shopify grows rapidly in size, and even as the economy has significantly worsened over the last year, it’s still managed to grow its sales by more than 22% over the last 12 months.
Furthermore, it currently trades at just 11.7 times its forward sales, well below its five-year average of 22.5 times forward sales.
Therefore, while Shopify still trades at a reasonable price, it’s certainly one of the best Canadian growth stocks you can buy and hold for years.
One of the best long-term Canadian growth stocks
Another impressive long-term growth stock to consider adding to your portfolio is Alimentation Couche-Tard (TSX:ATD), the convenience store and gas station operator.
That may not sound like the most exciting business, but Couche-Tard has done an exceptional job over the years, growing both by acquisition and organically. Not to mention, much of Couche-Tard’s business is defensive, allowing the stock to weather economic downturns better than many other companies.
Therefore, the fact that Couche-Tard is both defensive and offers significant long-term growth potential makes it one of the best Canadian stocks to buy. In the last 10 years, investors have earned a total return of more than 574% or a compound annual growth rate of 21%.
It’s also worth noting that all eight analysts covering Couche-Tard rate it a buy, and its average analyst target price is more than 20% higher than where it trades today. If you’re looking for a top Canadian growth stock to buy now, Couche-Tard is an excellent choice.
A top defensive growth stock that’s perfect for this economic environment
Lastly, Brookfield Infrastructure Partners (TSX:BIP.UN) is another intriguing growth stock that has defensive qualities.
The stock owns a portfolio of essential and defensive infrastructure assets all over the world. However, while many of its operations are defensive, Brookfield is run like a growth stock.
Management is constantly looking at selling off higher-value assets and recycling the cash into new opportunities where it identifies growth potential or value.
And just like Couche-Tard, all four of Brookfield’s analysts rate it a buy, with the average analyst target price sitting at a more than 25% premium to where it trades today.
Therefore, Brookfield is one of the best Canadian growth stocks to buy and hold for years. Not only can you have confidence in owning it through economic downturns, but it also offers impressive long-term growth potential and pays an attractive distribution that currently yields more than 4.3%.
