Many working professionals aspire to retire as millionaires. Fortunately, it is not difficult for disciplined investors who make consistent investments to achieve this. A monthly investment of $500 grown at an annualized rate of 10% for 30 years can create wealth of $1.1 million. Against this backdrop, let’s look at the three top Canadian stocks that can potentially deliver over 10% of annual returns in the long run.
Source: Getty Images
Dollarama
Dollarama (TSX:DOL) is a Canadian discount retailer that operates 1,583 stores nationwide. Given its superior direct sourcing method and efficient logistics network, the company provides various consumer goods at attractive prices, thus driving its same-store sales even during challenging environments. Supported by its healthy same-store sales and store network expansion, the company has grown its financials at a healthier rate, thus delivering superior returns. Over the last 10 years, the company has delivered 795% returns at an annualized rate of 24.5%.
Dollarama has plans to open 60–70 new stores annually, thus expanding its footprint to 2,000 stores by the end of fiscal 2031. Given its capital-efficient, growth-oriented business model, quick sales ramp-up, and average payback period of less than two years, these expansion initiatives could boost its top and bottom lines. Besides, the company has a 60.1% stake in Dollarcity, which operates 570 discount stores in Latin America. Further, Dollarama can increase its stake by an additional 9.9% before the end of 2027. Meanwhile, Dollarcity has plans to add 480 more stores by the end of fiscal 2031. So, Dollarama’s overall growth prospects look healthy and could continue to drive its financials in the coming years, thus delivering oversized returns.
goeasy
goeasy (TSX:GSY) is a Canadian subprime lender that has grown its top and bottom lines at an annualized rate respectively of 20.2% and 28.1% for the last five years. Supported by these solid financials, the company has returned 256% over the previous five years at an annualized rate of 28.9%. Despite consistent growth over the last few years, the company has acquired a small percentage of the $218 billion Canadian subprime market and has substantial scope for expansion.
Meanwhile, goeasy continues to expand its product range, develop new distribution channels, venture into new markets, and strengthen its digital infrastructure, which could continue to expand its loan portfolio. The company’s management projects its loan portfolio to grow around 50%, reaching $6.2 billion by the end of 2026. Besides, the company has adopted next-gen credit models and tightened underwriting requirements, which could reduce defaults and boost its operating margins. Moreover, the company also offers quarterly dividends, with its forward yield at 2.6%. Considering all these factors, I am bullish on goeasy.
Waste Connections
Another stock that has the potential to deliver over 10% returns in the long run would be Waste Connections (TSX:WCN), a waste management company operating in secondary and exclusive markets across Canada and the United States. It has expanded its footprint through organic growth and strategic acquisitions, driving its financials. Supported by its consistent financials, the company has returned around 590% over the last 10 years at an annualized rate of 21.3%.
As of July 24, Waste Connections had acquired 18 assets this year and signed multiple definitive agreements in the franchise markets, which the company expects to close this year. These acquisitions could contribute around $650 million to its annualized revenue. Besides, the company is constructing several renewable natural gas and resource recovery facilities, which could become operational in the coming years. Given its solid underlying business and these healthy growth prospects, I expect Waste Connections to continue outperforming in the coming years.
