TVK:CC - 4 Growth Stocks to Buy and Hold Forever
2024-02-27 09:30:00 ET
Canada has some exceptional growth stocks. Some are well-known, and some trade under the radar of most investors. Many of these stocks today have soared in late 2023 and early 2024. As a result, their valuations are quite steep.
Any serious pullback would be a great time to buy these stocks and then hold them for years and even decades. Here are four growth stocks you want to buy and hold for nearly forever.
The GOAT of growth
The first “forever growth stock” is Constellation Software ( TSX:CSU ). It might be the GOAT (greatest of all time) for growth stocks in Canada. With a track record of delivering about 30% compounded annual growth rates for more than a decade, this stock is one of the best performers in Canada.
Remarkably, many Canadians are not even aware of this company despite its nearly $80 billion market cap . The reason is that it operates through hundreds of small, niche vertical market software businesses. These businesses are economically crucial to their customers. Consequently, it has a very resilient business.
Constellation acquires these businesses with a high return threshold. As a result, they tend to yield a lot of cash, which Constellation uses to acquire more businesses. It’s a great formula for compounding. Constellation is a very pricey stock today. However, it would be a great long-term purchase on a decent pullback.
A top financial stock
goeasy ( TSX:GSY ) is another strong contender for a long-term buy-and-hold stock. With interest rates quickly rising, many big Canadian banks have constrained lending to only their highest-quality clients. As a consequence, the market for non-prime and subprime consumer loans continues to expand.
goeasy is one of Canada’s largest and most well-known non/sub-prime lenders. It has locations across Canada and a strong online lending platform.
The company has recently expanded into auto/recreational vehicle finance and buy-now-pay-later financing. It is also looking to add new credit card and banking options.
Over the past three years, it has grown revenues and earnings per share by 17% and 18% respective compounded annual rates. It has a strong outlook to continue growing at a mid-teens rate going forward.
A global consulting firm
WSP Global ( TSX:WSP ) has been another growth stock worth holding for the long term. WSP has become a global leader in consulting, design, engineering, and project management. Revenues and earnings per share have grown by a respective 17% and 23% compounded annual rate over the past three years.
As populations rise around the world, demand for infrastructure will only grow. As a global leader, it stands to gain strong wins in its project backlog.
The company still has many acquisition opportunities to consolidate. Likewise, growth should come from improving margins, expanding service offerings, and market share gains.
An industrial growth stock
A final growth stock to hold for the long term is TerraVest Industries ( TSX:TVK ). TerraVest is not your typical growth stock. It owns a bunch of bland industrial businesses focused on heating, oil/gas, chemical/gas storage, and transportation.
The key has been its ability to deploy its capital at high rates of return. While it buys bland businesses, it buys them at cheap prices and takes their cash flows to invest in more cheap businesses.
It has been able to grow revenues and earnings before interest, tax, depreciation, and amortization by an approximate 35% annual rate over the past three years.
TerraVest has a young, smart management team and a highly invested board. If it can continue to deploy capital smartly, long-term investors could still do very well from here.
The post 4 Growth Stocks to Buy and Hold Forever appeared first on The Motley Fool Canada .
Fool contributor Robin Brown has positions in Constellation Software, Goeasy, TerraVest Industries, and WSP Global. The Motley Fool recommends Constellation Software, TerraVest Industries, and WSP Global. The Motley Fool has a disclosure policy .
2024