CSU:CC - Could Constellation Software Stock Help You Retire a Millionaire?

2024-01-11 11:45:00 ET

Canadian investors tend to have one goal in mind when they start investing, and that’s retirement. And these days, many Canadians believe they need quite a lot of cash on hand to retire. In fact, the average is about $1.25 million!

That could only rise in the years to come, which is why investors are likely worried and wondering whether there are stocks out there that could help them achieve millionaire status by retirement. So, could one of those stocks potentially be Constellation Software ( TSX:CSU )?

It’s done it before

First, let’s get into why Constellation stock could be considered a millionaire-maker in the first place. And that’s easy, it’s done it before! The company was founded by a venture capitalist in 1995 and went public in 2006. Shares started at $24 and have since surged 14,425% to reach $3,490 as of writing!

Last year, The Economist touted the stock as the world’s best acquirer of tech firms . And, of course, in 2024, that remains the case. Its business strategy is to acquire software companies, holding them long-term. Since its founding, the stock has acquired over 500 businesses, usually for somewhere around $5 million.

And even in these days of more competition, the stock continues to find new ways of growth. One of these ways is by creating a spinoff of its company in Europe, where it’s already seen great success.

Earnings keep up

Despite being on the market for so long in the tech sector , Constellation stock hasn’t shown any signs of slowing down. During its most recent earnings report, the company saw revenue increase 23% year over year to $2.13 billion compared to $1.73 billion the year before.

Net income for the quarter increased 30% to $177 million, with cash flows from operations up 60% to $513 million. There were numerous acquisitions as well, including Optimal Blue for $201 million and numerous other acquisitions for a total of $223 million.

The stock also announced it would increase its dividend by $1 for 2024, bringing the total to $5.34 per share annually. Yet, of course, you’re into this for the returns. And while that dividend is nice, it won’t be what makes you a millionaire.

Could it happen again?

It’s quite unlikely we’re going to see shares increase by 14,425% yet again. However, investors could indeed see shares increase by a substantial amount in the next decade, similar to what we’ve seen in the last decade as well. In that time, shares are up 1,398%.

Analysts have already pegged the stock as seeing a strong start to the year, with a share target of $3,900 as of writing. That would bring in about $1,000 more than last year, with the stock continuing to substantially outperform. With so many acquisitions on board long term after the last year, the stock clearly has been taking advantage of the market. And more are likely on the way.

So, let’s say you were to want to achieve millionaire status in the next decade, seeing shares grow by another 1,398% in the next decade as well. Here is what that could look like.

Remember, this is just an example, and that’s certainly a large amount to invest. But let’s say you do even half of it and hold it for another decade; you could certainly achieve millionaire status — especially with a strong stock like Constellation stock guiding the way!

The post Could Constellation Software Stock Help You Retire a Millionaire? appeared first on The Motley Fool Canada .

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy .

2024