The first share/stock ever issued in the world was in the early 1600s by the Dutch East India Company, but if we go beyond stocks as an asset class, investing may have been around for much longer than that.
People have invested in gold, livestock, commodities, and most importantly, land for centuries.
And one common variable across all investments and all timelines is growth. Even though dividends and capital preservation are essential investment goals, growth has most often the primary goal of investors.
And to help you achieve that goal, I’ve prepared this list of best growth stocks in Canada that may stand the test of time.
Best TSX Growth Stocks – What Do You Need To Know?
Different investors define growth stocks differently. However, the most common (and simplified) definition is that growth stocks have an opportunity to outpace the broad market when it comes to capital appreciation potential.
So any investment which would have grown your capital more than what you have achieved by investing in the broad market (index fund or an ETF). For Canadian investors, that would be the TSX.
It’s important to know that the TSX offers relatively slow growth compared to US stock markets, especially the tech-heavy NASDAQ.
So the bar is relatively low. Still, it serves as a helpful reference point to understand whether or not you are “beating the market” and by what margin.
Another fact to consider is that there are two critical variables associated with growth: Time and predictability.
Different types of growth stocks have a different relationship with these too. As for the types, while these are not standard definitions, there are three different types of “growths” you may expect from different types of growth stocks.
Linear/Consistent Growth: Stocks that grow at an almost linear pace. This type of growth is very predictable and time-dependent, i.e., the more time you have, the more growth you can expect. These are usually great as long-term holdings and are often overvalued.
Cyclical Growth: These stocks offer different growth and fall phases. These patterns may be stretched out over one or two years or several years. With these stocks, waiting for the right price point (during a dip/correction) might be a more intelligent approach than buying high and holding them long-term.
Spikes: These are the most difficult to predict but can offer more growth in a matter of months than linear growth stocks do in years. Many downtrodden stocks are capable of growth spikes in the right market conditions, so the best you can do is buy low and wait.
Since our aim is for investors to take advantage of this evergreen list years in the future, we are sticking to linear and predictable growth stocks with strong competitive edges that offer relative certainty for the propagation of the same growth in the future.
Best Growth Stocks In Canada
For this list, the baseline, i.e., market performance, is the ten-year performance of the S&P/TSX Capped Composite Index.
The annualized average performance (8.48%) of the index is a bit different from cumulative returns (125.7%) for the past decade, but the growth stocks below have outperformed the index in both regards.
However, we have some stocks that have been listed for less than a decade, so their performance since inception is evaluated.
The ten-year period taken into account for these calculations (both above and below) is between mid-March 2012 and mid-March 2022.
Also, unless otherwise specified, all the stocks trade on the TSX. And they are arranged based on the growth pace they offer (ten-year or five-year CAGR).
1. Shopify Stock
Industry Niche: E-commerce platform
Shopify evolved from a small online store for snowboarding equipment to one of the most powerful e-commerce platforms in the world, which has the second-largest market share.
The company has an impressive global presence (175 countries) and helps millions of businesses create and maintain an e-commerce front.
What’s most impressive is the e-commerce that has grown around Shopify and includes over 8,000 different apps.
Shopify is also an outstanding growth stock. It started trading on the TSX in May 2015, and even after going through a catastrophic fall, which pushed the market value of the company down one-third of its peak, the stock grew over 1,700% by March 2022.
The maximum growth was over 6,000%. The stock can be a powerful long-term growth bet, especially if bought at a dip.
2. StorageVault Canada Stock
Sector: Real Estate
Industry Niche: Storage spaces
StorageVault was a small venture capital company, but through consistent growth, it has jumped into the senior exchange.
It’s a clear leader in a niche market space: storage spaces. The company operates through eight different brands (Q1 2022) and has a portfolio of 194 locations (over 95,000 storage units).
It’s the only publicly listed company (in Canada) in this space, and its store count far outstrips the next best company.
StorageVault has one of the highest ten-year CAGR (48.8%) on the TSX. The fact that it started as a penny stock (less than $1 per share) has contributed to it. Its consistent growth makes it a strong buy even at its usual overvalued price.
3. Constellation Software Stock
Industry Niche: Software and services
Growth consistency is probably Constellation Software’s defining trait. For the last two decades, it has been one of the most consistent growth stocks on the TSX and is usually the most expensive stock (by price, not valuation) on the exchange.
It has a ten-year CAGR of 39.2%, and it doesn’t include any growth spurts or spikes based on valuation flukes.
Constellation caters to a comprehensive market and a vast pool of public and private businesses (over 125,000) through its subsidiaries.
It also caters to many different industries, and this variety and diversified portfolio contribute to the company’s continuous growth.
4. Cargojet Stock
Industry Niche: Air Freight/Cargo
Cargojet is Canada’s premier air cargo company, especially for time-sensitive overnight air cargo services.
The company carries about 1.3-million-pound cargo every night (on average) and has a fleet of 28 aircraft.
A stellar on-time arrival percentage/track record is the company’s defining advantage for its partners, including businesses like Amazon.
Apart from the brutal correction phase the stock experienced after its post-pandemic growth matured, Cargojet’s growth has been remarkably consistent.
And its ten-year CAGR (which accounts for the said correction) is still at 36.7%. Cargojet has a stable business model, and with the e-commerce boom, it’s likely to see demand for its services growing for the foreseeable future instead of waning.
5. Goeasy Stock
Industry Niche: Personal Loans
Goeasy has tapped into a thriving market in Canada, i.e., potential borrowers that don’t qualify for personal loans from conventional lenders (banks).
It has allowed it to evolve and grow to a much larger scale than alternative lenders usually grow. It has over 400 branches across the country, making it comparable to a sizeable bank. Its strong financials have been one of the primary drivers of its organic growth.
The stock has seen a phenomenal expansion in the last decade, and the CAGR has come out to about 35.7%. Its fundamental strengths offer reasonable surety that the stock might offer similar growth in the future as well.
6. Hamilton Thorne Stock (TSXV)
Industry Niche: Patented laser technology-based equipment
Hamilton Thorne is the only venture capital and microcap stock on this list. It’s also the only one that represents a US-based company.
But its past performance, competitive edge, and growth potential have earned it a place on this list. The company caters to particular healthcare markets and has carved out a sizeable piece of the total market for itself.
Its strength also comes from its geographically diverse customer base and the fact that a massive slice of its revenue comes from consumables (reliable).
Its ten-year CAGR of 34.3% is top of the line, though it usually comes with an overvalued price tag.
7. Boyd Group Services Stock
Industry Niche: Collision repair centers
Boyd Group is the collision-repair giant of North America and has the largest network of non-franchised centers in the world, which allows it to maintain its quality standards across its 841 locations in the two countries (709 in the US).
About 90% of its revenue comes from insurance companies, which lends its financials more stability.
The stock has been almost consistently growing since 2006, and the last ten-year CAGR is about 29.6%. It’s a stable business that might experience similar growth in the foreseeable future.
There are no major disruptions on sight, at least not until self-driving vehicles drop the number of collisions down significantly.
8. Descartes Systems Group Stock
Industry Niche: Logistics Technology Platform
Descartes Systems has created a well-integrated logistics technology platform that supposedly combines the most extensive logistics networks in the industry.
The network is spread out over 160 countries and covers hundreds of thousands of organizations across different geographics. This connectivity powers Descartes’ intelligence network and data-driven solutions
This future-facing, data-driven approach ensures the growth of its network, especially in today’s world where supply chain visibility and integration are becoming propriety for businesses and countries.
So the ten-year CAGR of 27% may have a reasonable chance of propagating farther into the future.
9. Alimentation Couche-Tard Stock
Sector: Consumer staples
Industry Niche: Convenience retailers
Alimentation Couche-Tard is considered one of the convenience retail giants in the world. It has three brands under its banner and a total of over 14,200 stores in 26 countries.
This places it among the top five chains in the world. The US has the largest concentration of ATD stores, followed by Canada.
This geographically diverse footprint and consumer base spread out across the world make it a very healthy and stable business, though the stability doesn’t come at the cost of growth.
Its ten-year CAGR of 25.3% puts it among this list, though the pace has slowed down recently.
10. WSP Global Stock
Industry Niche: Professional services
WSP Global connects an impressive network of professionals that collectively offer solutions and professional services to multiple industries.
However, the bulk of the company’s revenue comes from the transportation and infrastructure solutions it offers.
The company has grown at a powerful pace over the years, both organically and through several acquisitions over the years.
As a professional services company, WSP finds it easy to keep its financials healthy, and its geographically diverse presence lends more stability to the business.
This endorses its value as a long-term growth holding that has a ten-year CAGR of 24%.
11. Thomson Reuters Stock
Industry Niche: Information/Data and professional solutions
Thompson Reuters has its roots in the news business, and it has leveraged its reputation and resources to emerge as one of the pre-eminent “answer” companies in the world.
It offers the right data and information solutions to a variety of industries and helps the stakeholders make intelligent and informed decisions.
Three major customer pools of TRI include legal, tax and accounting, and news and media.
The solutions and services it offers fall under several products and brands the company has developed or acquired over the years.
It’s a future-facing company that is highly capable of growing at its current robust pace, indicated by its ten-year CAGR of 19.9%.
12. Brookfield Asset Management Stock
Industry Niche: Asset management
Brookfield Asset Management is the parent company of Brookfield Infrastructure and Brookfield Renewables, both of which offer relatively similar growth potential and prospects.
However, as the parent company, Brookfield Asset Management might be a more practical choice. It’s one of the largest Canadian companies by market cap and has over $690 billion worth of assets under management.
Its geographic presence is just as impressive, and it has assets and operations in around 30 countries.
Its focus on renewables and critical infrastructure makes it a smart asset management company that may evolve alongside the market. And it’s well-positioned to sustain its ten-year CAGR of 19%.
There are several other companies that you should look into for their growth histories, capital appreciation potential, business models, and financial fundamentals that offer reasonable surety of continuous growth.
- Toromont Industries Stock
- Franco Nevada Stock
- Algonquin Power & Utilities Stock
- Canadian National Railway Stock
- Sun Life Financial Stock
- Waste Connections
- National Bank of Canada
- Colliers International Group
- Enghouse Systems
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These best growth stocks in Canada can essentially be bought anytime and, if kept for long enough, might yield promising returns.
However, the best time to buy would be market crashes, corrections, or sector-wide dips. When bought at a discount, the return potential will get a boost, and you may also get a better valuation deal.
If you want to augment portfolio growth with dividends for a different kind of return potential, these dividends stocks might be worth looking into.