Canadian investors can earn life-changing returns from stocks in a wide assortment of sectors. While we often associate multi-bagger stocks with technology stocks, that is not always the case.
Here is a list of four unique Canadian stocks that have multiplied $10,000 investments into $100,000 or more. Most of these stocks have taken about 10 years to reach that mark, but they are still attractive stocks to own today as well.
A leading “dollar” store
Dollarama (TSX:DOL) only charges its customers a dollar or two (or three now) per item. Yet it has found a way to turn those dollars into some serious profits over time. In fact, over the past 10 years, Dollarama has turned a $10,000 investment into over $107,000. The fact is, it has captured a low-cost market niche that is difficult to replicate.
I don’t know about you, but I always go into Dollarama for one item and come out with a basket of sweets and extra odds and ends. It just has the right products and pricing mix for everyday life. For a grocery-type business, it earns incredibly high EBITDA margins that over 25%.
Likewise, it is hoping to grow its Canadian store count by nearly 50% over the coming decade. Similarly, it has a strong growth trajectory in South America. A stable, growing business makes this one Canadian stock to own for the next decade.
A lesser-known Canadian tech stock
Many Canadians have likely never heard of Enghouse Systems (TSX:ENGH). Yet over the past 10 years, it has turned a $10,000 investment into $124,000. Most of Enghouse’s operations are outside Canada. It has done a great job acquiring undervalued technology businesses, integrating them, and then turning them into high-cash-yielding machines.
This Canadian stock has recently experienced a fairly significant pullback. However, it could present some very good value here. In fact, it is trading below its historical valuation range. Due to the pandemic, its growth-by-acquisition thesis has somewhat slowed.
Yet it keeps churning out cash. Today, it has nearly $170 million of net cash on its balance sheet to deploy. I believe growth will eventually recover, and investors will be happy they held this great quality business.
A top Canadian logistics software stock
Descartes Systems (TSX:DSG)(NASDAQ:DSGX) has also earned the right to this honoured list. It has turned $10,000 into $134,000. It provides crucial cloud-based software-as-a-service solutions for logistics-intensive businesses.
Descartes operates the world’s largest multi-modal logistics network. Like Enghouse, Descartes has been growing its service offering through acquisition. Since 2014, it has completed 27 acquisitions worth over $1 billion.
This is a very expensive Canadian stock. However, Descartes’s garners very stable, growing revenues and produces very high-margin returns on that growth. Cross-border trade is increasingly becoming complex. Consequently, Descartes’s solutions are more key to its customers than ever. I might wait for a pullback, but this is definitely a top stock to hold for years to come.
An airline for freight
Speaking about transportation businesses, Cargojet (TSX:CJT) has been lifting heavy Canadian cargo for years. It has paid off handsomely for many investors. Had you put $10,000 into this stock in 2012, you’d be sitting on at least a $200,000 return (not including dividends). This might be one of the most underrated stocks in Canada.
While it had a great year in 2020, it has pulled back this year. That is a wonderful opportunity for unafraid Canadian investors. The company has a dominant position in the overnight freight market in Canada.
Now, it is looking to expand its services internationally. This stock only has a market capitalization of $3 billion. It has ample room to grow. If it can replicate its Canadian success elsewhere, it is likely that this stock could still create a lot of shareholder value.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Robin Brown owns shares of DESCARTES SYS and Enghouse Systems Ltd. The Motley Fool owns shares of and recommends CARGOJET INC. and Enghouse Systems Ltd.