Investors planning to invest a portion of their savings into the stock market could consider investing in the shares of companies with strong fundamentals and the potential to deliver solid long-term gains. So, if you plan to invest $500 in Canadian stocks right now, here are my top five picks that could easily outshine the broader equity market.
goeasy
goeasy (TSX:GSY) is one of my top picks. The non-prime lender is growing fast, enhances shareholders’ returns through higher dividend payments, and trades cheap on a price-to-earnings basis. All these positives support my bullish outlook. goeasy stock has grown at a CAGR (compound annual growth rate) of about 25% in the last five years, handily outperforming the broader market. This growth is backed by its robust sales and earnings growth.
In the future, the company’s growing loan portfolio, stable credit and payment performance, and operating leverage will drive its revenue and earnings. Besides capital gains, investors will also benefit from the company’s ability to grow its dividend at a decent pace. Overall, goeasy is a compelling long-term bet near the current levels.
Shopify
Despite the massive correction, Shopify (TSX:SHOP) stock is up about 286% in five years. This means that its stock has grown at an impressive CAGR of 31% during the same period. Shopify’s ability to deliver solid capital gains and its dominant positioning in the e-commerce space keep me optimistic about its prospects.
Looking ahead, higher consumer spending, ongoing digital transformation, and Shopify’s innovative products, such as Shopify POS, Markets, and Capital, position it well to deliver stellar growth. Furthermore, its focus on streamlining its business, reducing costs, and providing sustainable earnings will drive its share price higher.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) stock could be a solid addition to your portfolio for growth and stability. The retailer runs a low-risk business and has an extensive store presence in the Canadian market, which strengthens its performance. Further, its accretive acquisitions accelerate its growth rate.
Despite operating a defensive business, Alimentation Couche-Tard has delivered notable returns in the past. Its stock has grown at a CAGR of over 20% in the last five years. Moreover, it increased its dividend at a CAGR of more than 26% in the past decade. The company’s focus on driving organic growth, accretive acquisitions, store expansion, and value pricing will enable it to deliver significant returns in the long term.
Aritzia
Investors should capitalize on the pullback in the shares of the luxury fashion brand Aritzia (TSX:ATZ). While a slowdown in its growth rate has weighed on its stock, the company remains confident of growing its revenue at a CAGR of 15-17% through fiscal 2027. Meanwhile, its bottom line growth is anticipated to be faster than sales, which is encouraging.
Aritzia is poised to benefit from new boutique openings, favourable new store economics, expansion in the U.S., growing brand recognition, and focus on adding newness to its offerings. Moreover, higher sales and efforts to lower costs augur well for earnings growth. The stock trades at a discounted valuation and presents a good buying opportunity.
Telus
I’ll wrap up with the telecom company Telus (TSX:T). It has consistently delivered profitable growth, reflecting its ability to grow its customer base. In addition, its increasing average revenue per user and lower churn are positives. Telus’ services are deemed essential for the economy. This adds stability to its performance. Moreover, its focus on expanding its 5G coverage and PureFibre footprint augurs well for future growth.
Investors will also benefit from the company’s focus on returning substantial cash to its shareholders via share repurchases and higher dividend payments. Telus has returned over $1 billion in dividends in the first half of 2023. Moreover, it has paid about $18.6 billion in dividends since 2004.
