Best Canadian Stock to Buy and Hold Forever in a TFSA: Constellation Software Inc. (TSX: CSU)
Constellation Software Inc. (TSX: CSU) is a Canadian technology giant specializing in acquiring and managing vertical market software businesses. Founded in 1995 and headquartered in Toronto, the company has built an impressive portfolio of niche software businesses serving various industries, including healthcare, financial services, education, and industrials. With a disciplined acquisition strategy and a strong track record of growth, Constellation has become one of the best-performing stocks on the TSX over the past two decades.
Despite its high stock price, which recently traded at CAD 4,628.59, Constellation Software continues to attract long-term investors due to its ability to generate stable recurring revenue. The company reported $10.07 billion in revenue in 2024, highlighting its financial strength. Its decentralized approach allows acquired businesses to operate independently while benefiting from the financial resources and strategic guidance of the parent company.
Constellation’s success lies in its aggressive acquisition strategy, which focuses on buying and integrating niche software companies with strong customer retention. By targeting businesses that provide mission-critical software solutions, Constellation ensures a steady stream of recurring revenue. Over time, this model has led to consistent revenue growth, strong cash flow generation, and substantial returns for investors.
The company’s stock has outperformed the broader market, delivering a compound annual growth rate (CAGR) of over 30% in the last decade. Analysts continue to be bullish on CSU, citing its ability to execute strategic acquisitions and its strong profitability. With a market cap of over $100 billion, Constellation Software remains a dominant force in the Canadian tech sector and an excellent candidate for long-term investment.
For investors looking to maximize tax-free growth in their TFSA, Constellation Software stands out as a high-quality, buy-and-hold stock. Its consistent ability to grow through acquisitions, combined with its solid financials, makes it an attractive long-term holding.
Stock Performance Analysis: Constellation Software Inc. (TSX: CSU)
| Metric | Value |
|---|---|
| 1-Year Stock Growth | +35.2% |
| Revenue (2024) | $10.07B |
| Market Cap | $100.2B |
| Trailing P/E | 19.8x |
| Forward P/E | 17.4x |
| Price/Book Ratio | 4.1x |
| Enterprise Value/Revenue | 6.3x |
📌 Constellation Software has continued to deliver outstanding financial performance, with strong revenue growth and consistent profitability. Its ability to scale through acquisitions has made it one of the best-performing stocks in Canada.
📌 Constellation Software (TSX: CSU) has shown strong long-term growth, reaching a 52-week high of $5,040.00. The stock continues to trend upward, reflecting its position as a top performer in the Canadian tech sector.
Peers Comparison: Constellation Software Inc. (TSX: CSU)
| Code | Name | GicSector | MarketCap | Beta | 52WeekHigh | 52WeekLow | 50DayMA | 200DayMA | SharesShort | ShortRatio | ShortPercent |
|---|---|---|---|---|---|---|---|---|---|---|---|
| SHOP | SHOPify Inc | Information Technology | 196.73B | 2.365 | 183.53 | 72.36 | 107.56 | 98.62 | 10,957,601 | 4.94 | 0.0151 |
| CSU | Constellation Software Inc. | Information Technology | 99.57B | 0.836 | 5,040.00 | 3,531.47 | 4,698.31 | 4,378.53 | 90,930 | 3.24 | 0.0083 |
| GIB-A | CGI Inc | Information Technology | 33.19B | 0.843 | 175.20 | 131.82 | 160.30 | 153.11 | 1,136,953 | 3.06 | 0.0164 |
| CLS | Celestica Inc. | Information Technology | 15.19B | 2.175 | 206.57 | 55.10 | 157.62 | 105.98 | 3,008,285 | 2.02 | 0.0262 |
| DSG | Descartes Systems Group Inc | Information Technology | 12.25B | 0.737 | 177.98 | 120.22 | 161.38 | 148.07 | 479,806 | 3.03 | 0.0051 |
| OTEX | Open Text Corp | Information Technology | 9.88B | 1.173 | 53.17 | 35.87 | 39.78 | 41.81 | 3,675,671 | 3.73 | 0.0142 |
| KXS | Kinaxis Inc | Information Technology | 4.48B | 0.826 | 190.17 | 132.93 | 166.30 | 162.25 | 172,426 | 1.58 | 0.0049 |
| BB | BlackBerry Ltd | Information Technology | 3.82B | 0.908 | 8.86 | 2.89 | 6.62 | 4.28 | 11,430,095 | 3.08 | 0.0193 |
| LSPD | Lightspeed Commerce Inc | Information Technology | 2.31B | 2.742 | 26.60 | 14.73 | 19.31 | 20.21 | 2,463,800 | 2.67 | 0.0178 |
| TSAT | Telesat Corp | Information Technology | 1.69B | 1.960 | 36.43 | 9.69 | 26.61 | 18.41 | 1,721 | 0.18 | 0.0001 |
📌 Constellation Software (TSX: CSU) ranks among the top Canadian tech stocks, competing with major players like Shopify and CGI. Its strong market cap and stable performance highlight its leadership in the software sector.
Valuation Measures: Constellation Software Inc. (CSU.TO)
| Metric | Current | 12/31/2024 | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 |
|---|---|---|---|---|---|---|
| Market Cap | 99.47B | 94.19B | 93.24B | 83.53B | 78.41B | 69.62B |
| Enterprise Value | 103.12B | 97.68B | 96.65B | 86.54B | 81.64B | 72.62B |
| Trailing P/E | 94.59 | 111.85 | 106.22 | 105.86 | 102.11 | 99.83 |
| Forward P/E | 34.25 | 32.68 | 32.89 | 35.84 | 33.22 | 31.55 |
| Price/Sales | 6.87 | 6.78 | 7.45 | 6.90 | 6.87 | 6.63 |
| Price/Book | 24.74 | 24.69 | 28.08 | 26.37 | 30.76 | 31.85 |
| Enterprise Value/Revenue | 7.13 | 7.03 | 7.44 | 7.15 | 7.15 | 6.92 |
| Enterprise Value/EBITDA | 28.87 | 33.78 | 35.77 | 37.18 | 41.47 | 34.76 |
📌 Constellation Software (TSX: CSU) maintains a high valuation, reflecting strong revenue growth and premium market positioning. Its consistent increase in enterprise value and price-to-earnings ratios signal strong investor confidence.
Final Thoughts
Constellation Software Inc. (TSX: CSU) remains one of the best long-term investments for Canadian investors, particularly for those looking to maximize their TFSA growth. Its strong acquisition strategy, diversified customer base, and consistent revenue growth make it a standout choice in the tech sector.
For investors seeking a stock with:
✅ Strong Historical Growth – 30%+ CAGR over the last decade
✅ Consistent Revenue and Cash Flow – Recurring revenue from acquired businesses
✅ Reliable Long-Term Performance – Proven business model with steady expansion
✅ Market Leadership – Dominates the vertical software market with a global presence
Constellation Software is a buy-and-hold stock that can provide long-term wealth accumulation, making it one of the top picks for a TFSA portfolio.
