Stocks are must-haves in your portfolio if you plan to invest for long-term financial goals like retirement. Further, as top Canadian stocks have witnessed a pullback amid macro uncertainty, now is an excellent opportunity to add a few fundamentally strong companies to your portfolio retire rich.
But before allocating funds, investors should look for companies with a solid revenue base and profitable growth. Also, one must focus on diversifying their portfolio and should not put all of their money into a few stocks. This will reduce risk and ensure higher returns in the long term.
With this backdrop, I’ll discuss three profitable Canadian corporations, shares of which look attractive near the current levels. Further, these stocks have outperformed the broader markets in the past and have the potential to deliver outsized returns over the next decade.
A top small-cap financial services company
Growing at a CAGR (compound annual growth rate) of 23% in the last five years, goeasy (TSX:GSY) is a solid stock for investors planning to invest for the long term. This financial services company offers secured and unsecured loans to subprime borrowers and has been growing fast. For instance, goeasy’s top line sports a CAGR of 20% in the past five years. At the same time, its bottom line grew at a CAGR of 27%.
Impressively, the company also pays dividend and has increased it in the last nine consecutive years.
Looking ahead, the momentum in its business will likely sustain, driven by high-quality loan origination. While its consumer loan portfolio is forecasted to increase, its high-quality originations indicate that its credit portfolio will remain strong. Thanks to the recent pullback, goeasy stock trades at a next 12-month (NTM) price-to-earnings multiple of 6.4, which is much below its historical average of about 11, providing a solid entry point.
A fast-growing fashion house
Aritzia (TSX:ATZ) offers lifestyle apparel and has been growing rapidly, despite pressure on consumer spending. The fashion house’s net revenue grew at a CAGR of 19% since fiscal 2018. Earnings growth was even better, as it increased at a CAGR of 28% during the same period. Thanks to the solid growth, Aritzia stock appreciated by approximately 250% in the past five years, delivering a CAGR of over 28%.
The expansion of its boutiques, strength in the e-commerce channel, and growing brand awareness are contributing to its success.
Aritzia expects its revenues to increase at a CAGR of 15-17% through 2027, reflecting new boutique openings, U.S. expansion, a favourable mix of full-priced sales, and e-commerce growth. Meanwhile, its earnings growth is projected to surpass sales. Thanks to the strength in its business, Aritzia is a solid stock to achieve long-term financial goals.
Canada’s top air cargo company
The final stock in this list is Cargojet (TSX:CJT). Thanks to its resilient business and profitable growth, Cargojet has multiplied investors’ wealth in the past decade. The stock has witnessed a pullback due to a slowdown in the e-commerce space, presenting a solid buying opportunity for long-term investors.
Cargojet’s diversified revenue streams, partnerships with large logistics companies, and next-day delivery capabilities to maximum Canadian households augur well for growth. Furthermore, its long-term contracts with minimum revenue guarantee and cost pass-through provisions are positives.
Cargojet has a 100% customer retention rate, which is incredible. Meanwhile, its focus on network and fleet optimization, international expansion opportunities, and high entry barriers to the sector provide a solid base for long-term growth.