Investors planning to create lasting generational wealth should consider investing in fundamentally strong stocks that have the potential to consistently outperform the broader markets for decades. Moreover, it’s essential to diversify your portfolio to spread risk.
Against this backdrop, let’s delve into three Canadian stocks that have consistently outshined the broader markets over the past several years and have the potential to create significant wealth for their shareholders in the coming years.
goeasy
shares of the nom-prime lender goeasy (TSX:GSY) is a must-have stock to create wealth. The stock has gained about 427% in the past five years, reflecting a stellar compound annual growth rate (CAGR) of 39.4%. This notable appreciation in goeasy stock demonstrates the company’s ability to grow its revenue and earnings consistently at a double-digit rate.
It’s worth noting that goeasy’s revenue has increased at a CAGR of 19.62%. Moreover, its bottom line sports a five-year CAGR of 31.85%. Despite macro headwinds, goeasy exhibited a commendable 15% improvement in loan originations during the first nine months of 2023. Concurrently, the company’s consumer loan receivable portfolio experienced a significant 33% year-over-year surge, reaching $3.43 billion. Adding to these positives, goeasy’s efficiency ratio improved by 320 basis points, while its adjusted EPS (earnings per share) recorded a 20% growth.
Looking ahead, goeasy’s ability to expand its loan portfolio, omnichannel offerings, and strategic acquisitions will accelerate its top-line growth. Moreover, its stable credit and payment performance and operational efficiency will cushion its bottom line. Additionally, investors can expect increased dividends from goeasy. With its dominant position in the subprime lending market and operational efficiency, goeasy is poised to generate massive returns in the long term.
Shopify
Next up is Shopify (TSX:SHOP). The e-commerce platform provider is undoubtedly one of the top Canadian stocks that can help create lasting generational wealth. While its stock witnessed a massive correction following the COVID-led rally, it is still up about 467% in the past five years, delivering a CAGR of more than 41%.
The company is a dominant player in the e-commerce space and is well-equipped to capitalize on the ongoing digital transformation, positioning itself to outperform the broader markets. Moreover, its ability to grow its revenues rapidly even at scale, focus on innovation, and increase its product adoption bodes well for future growth. Additionally, Shopify’s focus on an asset-light model, cost-cutting measures, and initiatives to ease margin pressure will enable the company to generate sustainable earnings.
Overall, Shopify is poised to benefit from the structural shift in selling models towards omnichannel platforms. Meanwhile, its resilient revenue growth and emphasis on profitable growth will likely propel its stock price higher.
Dollarama
Despite operating a defensive and low-risk business, Dollarama (TSX:DOL) is surprisingly one of the top TSX stocks to create wealth in the long term. Investors should note that shares of this value retailer have grown at a CAGR of more than 25% in the past five years, reflecting an overall appreciation of about 207%. At the same time, the company paid a higher dividend to further enhance its shareholders’ value.
Dollarama provides a wide range of products at low, fixed price points. Thus, it continues to attract budget-conscious consumers. Furthermore, its extensive network of stores in the domestic market, direct sourcing, and focus on improving operational efficiency augur well for long-term growth.
Overall, Dollarama, with its low-risk business model and high growth, is poised to generate significant returns for its shareholders in the long term.
