CSU:CC - These 3 Stocks Have Doubled Over 3 Years: Can They Do It Again?
2023-08-21 13:00:00 ET
The last three years have been a roller coaster ride for the stock market after the March 2020 market crash. Three stocks beat the market volatility and doubled the money of those who invested in them. But past performance does not guarantee future returns. Does this hold for these stocks? Or do they still have that catalyst that could help them repeat their three-year growth trajectory? Let’s find out.
Constellation stock doubled in three years
Constellation Software ( TSX:CSU ), a stock you saw at $1,000 in 2019 and $2,000 in 2021, is now edging closer to $3,000 in 2023. Each time you thought the stock was expensive, it broke its record and doubled investors’ money in two to three years. How did it manage to do so?
Constellation acquires small vertical-specific software companies with less than $100 million in revenue and regular cash flows. It acquires sticky and niche companies and lets them operate independently. As their owner, Constellation gets a share in their cash flows, which it uses to acquire more companies.
Some acquisitions succeed, and some fail. But overall, the software behemoth keeps reinvesting cash into acquiring more sources of cash flows, thereby compounding returns. This model works particularly well in a bear market as it can acquire small companies at a discount. As Constellation’s size grows, so does its stock price. It doesn’t pay much dividends, which means a significant portion of the cash is reinvested in the business.
Constellation’s stock doubled in 39 months between April 2020 and July 2023. The speed at which it doubles is gradually slowing, but it has the potential to double your money over the next four to five years.
Now is a good time to invest in the stock as it has dipped around 5% due to market weakness. Avoid procrastinating as a delay in 2019 and 2020 cost many investors an opportunity to double their money.
Bombardier stock doubled in a year
Bombardier ( TSX:BBD.B ) has been a page-turner since the new management took over in 2020. The aerospace firm went through a turnaround as it sold all its assets except its profitable business jet segment. Addressing the elephant in the room, it used the sales proceeds to repay debt. And from 2021 began its recovery story. The demand for business jets surged post-pandemic, especially from high-net-worth individuals.
It used the incoming cash flow to repay debt. By the time central banks started increasing interest rates in March 2022, Bombardier had repaid a good chunk of its debt. Now it has repaid all debt maturing till 2024 and plans to repay another $1 billion. Thus, the stock jumped 111% between September 2022 and August 2023.
The business jet maker turned around from multi-year losses to profits. And now it expects its profit to grow by 2025. Bombardier stock fell 30% from its 2023 peak as the rising interest rates slowed overall economic activity. While the jet maker has a strong order book and is on track to deliver 138 aircraft in 2023, the stock is facing selling pressure because of market bearishness .
But it has strong fundamentals and has just begun its growth trajectory. Now is a good time to buy the stock as it could double your money. But this time, it would take longer to double.
Descartes Systems
Descartes Systems ( TSX:DSG ) is a resilient stock on a long-term growth trajectory. It grows when trade picks up momentum. Descartes Systems has a vast consumer base across different verticals, from oil companies to airlines to e-commerce.
It benefits from the momentum of its consumer verticals as clients use its supply chain management solutions for a particular transit route or a complete package. For instance, the Russia-Ukraine war increased the demand for its trade intelligence and customs solutions.
Descartes stock doubled between April 2020 and November 2021 as it rode the e-commerce wave. The stock has the potential to double your money in five to seven years as it benefits from the North American natural gas export boom.
The post These 3 Stocks Have Doubled Over 3 Years: Can They Do It Again? appeared first on The Motley Fool Canada .
Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software and Descartes Systems Group. The Motley Fool has a disclosure policy .
2023