When it comes to building long-term wealth, stocks are one of your best bets. There will be volatility along the way; there’s no avoiding that. But for the investors who are willing to be patient, along with having time on their side, the stock market could be all you need to create lasting generational wealth.
Building a winning portfolio
Choosing which stocks to invest in requires time to do your research. One place to start could be to look at companies that you believe have long-term growth potential. I’d suggest looking around for companies that you think will continue to be relevant for decades to come.
Once you have a handful of companies you’re ready to invest in, diversification should be considered. Unless you plan on investing in 20 companies or so from the get-go, you’ll want to be wary of your portfolio’s diversification. A simple solution there could be to load up on a couple of broad exchange-traded funds (ETF), at least until you own a well-rounded portfolio of individual stocks.
With that in mind, I’ve reviewed three top Canadian stocks to add to your watch list today. In addition to being a well-diversified basket of companies, the three stocks all have the ability to deliver market-beating returns over the long term.
Stock #1: Descartes Systems
After a disappointing performance in 2022, the tech sector came roaring back last year. Many tech stocks across the TSX largely outperformed the broader Canadian market’s return in 2023, putting up massive double-digit growth rates.
Even with the strong run-up in 2023, Descartes Systems (TSX:DSG) is still an excellent buy today for long-term investors. Shares have been up close to 200% over the past five years, yet tech stocks are trading just below all-time highs from 2021.
As a logistics and supply chain solutions provider, it’s admittedly not the most exciting stock in the tech sector. But if you’re in search of dependable market-beating growth potential, Descartes Systems should not be overlooked.
Stock #2: Brookfield Renewable Partners
The renewable energy sector also had a down year in 2022. The difference from the tech sector is that renewable energy stocks continued to slide throughout 2023, too. There’s no arguing that it’s been a rough go for green energy investors over the past several years.
That being said, as a long-term investor who is bullish on the growing demand for renewable energy, I see this as an incredibly opportunistic time to be loading up. Leaders across the renewable energy sector are trading at rare discounts today.
If you’re looking to put some money to work in the beaten-down renewable energy space, Brookfield Renewable Partners (TSX:BEP.UN) should be on your radar. The company is a global leader, providing its shareholders with instant diversification in the sector.
Even with the stock down close to 40% from all-time highs, shares are still up a market-beating 70% over the past five years. And that’s not even including the company’s very impressive dividend, which is currently yielding above 5%.
Stock #3: Air Canada
Airline stocks in North America don’t have the most sterling of reputations when it comes to market-beating returns. However, I have Canada’s largest airline, Air Canada (TSX:AC), on my watch list for two reasons.
First, Air Canada is one of the few North American airlines that has proven to be a market beater over the past decade. Volatility may have been high, but patient Air Canada shareholders have been well rewarded.
Second, Air Canada continues to trade far below pre-pandemic prices. The stock has struggled to rebound from its 2020 lows, presenting investors with an interesting value play.
If you’re willing to be patient and don’t mind the cyclicality, now could be a wise time to load up on this discounted airline stock.
