The stock market has been trending higher even though things have been tough with high interest rates and macro uncertainty. Looking ahead, the advancements in artificial intelligence (AI) technology, expectations of interest rates going down, and anticipation of higher corporate earnings could continue to push Canadian stocks higher.
With this backdrop, here are five fundamentally strong TSX stocks to buy now for massive returns in a decade. These companies can deliver above-average returns and solid capital gains. Plus, some of these companies also pay dividends, implying you could get a little extra cash regularly.
Constellation Software
Investors seeking stocks to outperform the broader markets and generate stellar returns could consider investing in Canadian tech companies. Within the technology sector, Constellation Software (TSX:CSU) could be a solid addition for its ability to capitalize on emerging technology trends and beat the broader markets with its returns.
Constellation Software stock has gained over 58% in one year and has increased at a compound annual growth rate (CAGR) of nearly 30% in the last five years, delivering a gain of about 270%. Its diversified portfolio of software businesses, growing customer base, custom solutions, and strategic acquisitions position it well to benefit from evolving tech trends and deliver solid returns.
goeasy
goeasy’s (TSX:GSY) ability to consistently grow its sales and earnings at a solid double-digit rate and enhance shareholders’ value through higher dividends. The stock is trading cheap on the valuation front, while it has delivered an average return on equity (ROE) of about 26.40% over the last five years.
The financial services company provides loans to subprime borrowers. Thanks to its large addressable market and solid credit underwriting capabilities, its stock has grown at a CAGR of nearly 32%, delivering overall capital gains of about 300%. Further, it enhanced its shareholders’ returns through higher dividend payments.
goeasy’s growing loan portfolio, diversified funding sources, steady credit performance, and operating efficiency will boost its sales and earnings. Its solid financials will drive its share price and dividend payments.
Dollarama
With its low-risk business model and high growth, Dollarama (TSX:DOL) stock is a no-brainer to buy now. The discount retailer sells products at low and fixed price points. Thanks to its value pricing strategy, Dollarama consistently attracts shoppers, supporting its financials, share price, and dividend payments.
Dollarama stock is up about 51% over the past year. It has grown at a CAGR of about 21.3% in the past five years. Its extensive store base, value pricing, and direct sourcing position it well to deliver steady growth and enhance shareholders’ returns through higher dividends.
Shopify
Shares of e-commerce platform provider Shopify (TSX:SHOP) are a must-have to capitalize on the shift towards digital platforms. The Canadian tech giant provides a multi-channel sales and marketing platform. In addition, its innovative products, such as Shopify Payments and Shopify Capital, and integration of AI will likely drive the number of paying merchants on its platform and support higher adoption of its offerings.
In addition, Shopify’s focus on cost reduction measures, transition towards an asset-light business model, improving take rate, and focus on delivering sustainable earnings bodes well for future growth and will likely support its share price. Shopify stock has corrected quite a lot from its COVID-driven peak and is trading at a compelling valuation.
Celestica
Shares of innovative supply chain solutions provider Celestica (TSX:CLS) could be a solid addition to your portfolio. While Celestica stock has rallied quite a lot, it has potential for further growth owing to its exposure to sectors with secular tailwinds, such as electric vehicles (EVs) and AI.
The ongoing deployment of AI tech will likely drive demand for Celestica’s offerings. Moreover, it will likely benefit from the strength in the commercial aerospace submarkets. While the EV sector is witnessing short-term demand headwinds, the electrification of vehicles and a shift towards green energy provide a solid platform for long-term growth.
