With interest rates beginning to decline and policymakers hoping for a soft landing, there’s renewed optimism that a bull market could be on the horizon, making now the ideal time to find high-quality growth stocks.
However, as is always the case, no matter what the economic environment is, it’s essential to find growth stocks with years of potential that you can buy and hold for a decade or more.
Typically, the longer a stock’s growth potential, the higher its quality and the more resistant it will be to bumps in the road and changing economic and market environments. Furthermore, when you give yourself a lengthy investment timeline, you naturally help mitigate any potential short-term risks or volatility.
So, with that in mind, if you’re looking to find high-quality growth stocks to add to your portfolio today and hold for the next 10 years, here are two of the top picks on the TSX.
One of the best and most consistent stocks on the TSX
If you’re looking for a high-quality growth stock to buy today and confidently hold for the next 10 years, goeasy (TSX:GSY) is certainly one of the best to consider.
The specialty finance stock has grown its business rapidly for years now while consistently managing its risk, leading to significant returns for shareholders. The best part is that even after its unbelievable growth, especially in the last five years, goeasy still has a market cap of just $3 billion, giving it a massive runway to continue growing.
To give you an idea of how impressive and consistent goeasy’s growth has been, in the last five years, its revenue has increased at a compound annual growth rate (CAGR) of 19.9%. Furthermore, its normalized earnings per share (EPS) have increased at a CAGR of 31.9%.
It’s also worth noting that goeasy’s consistent growth in both revenue and profitability continued throughout the pandemic and the slowing economic environment we’ve seen over the last few years.
Furthermore, since it consistently manages its risk well and keeps its charge-off rates within its target range, its margins have constantly improved, which has led to unbelievable growth in its normalized EPS.
This incredible execution by goeasy has led to massive returns for shareholders with the growth stock up by 211% in the last five years. Plus, when you factor in dividends, which also increase significantly each year, the total return shareholders have earned over the last five years is north of 279%.
It’s also worth noting that goeasy trades at a forward price-to-earnings ratio of just 9.5 times today, which is below its five-year average of 10.5 times. In addition, analysts expect another 19.3% increase in normalized EPS this year and a 20.9% increase in normalized EPS next year.
So, not only is goeasy trading at a reasonable price, but it continues to have plenty of prospects for growth, making it one of the best stocks you can buy today.
A reliable defensive growth stock
Another excellent growth stock to buy now that you can have confidence holding for years is GFL Environmental (TSX:GFL).
Although GFL is a much larger stock and won’t offer the same explosive growth potential as goeasy, it’s also a much more reliable stock, given the defensive nature of its business.
As one of North America’s largest waste management and environmental services companies, GFL provides highly recession-proof essential operations. It’s the perfect business model for a growth-by-acquisition business, which is exactly why it continues to offer so much potential for investors.
First, its revenue is expected to continue increasing consistently. In fact, analysts estimate GFL’s revenue will grow by 5.5% this year and 6.9% next year. More importantly, though, its operating margins are also expected to increase consistently, which is unsurprising for a growth-by-acquisition stock that continues to scale its business.
Analysts estimate that its earnings before interest, taxes, depreciation, and amortization (EBITDA) will increase by 11.9% this year and another 10.7% this year, considerably outpacing the growth in revenue.
So, if you’re looking for a reliable growth stock you can buy now and have confidence in holding for years to come, GFL is easily one of the best in Canada.
