Written by Adam Othman at The Motley Fool Canada
Millionaire maker is a very “dynamic” classification for a stock. Many stocks that may offer excellent growth potential right now might not be as promising three or four years down the road. In comparison, weak prospects (right now) may have the potential to leave the market in the dust with the right circumstances in place. This uncertainty makes retirement planning with such stocks relatively tricky.
However, at least a few companies in any given market (including the TSX) have proven their mettle long enough to be considered millionaire makers with relative certainty. And two such stocks are available at a discount right now that you can buy and stash in your Tax-Free Savings Account (TFSA).
A convenience store chain
Laval-based Alimentation Couche-Tard (TSX:ATD) has seen substantial growth in a little over four decades since it has been around. From one store in Quebec in 1980, the company has grown its footprint to over 14,000 stores in 24 countries. There are just three brands under its banner, and they have helped it achieve quite a global footprint.
The ATD stock has seen just as phenomenal growth as the underlying company, and that’s not counting the jump it made in 2019 when the stock jumped a 100% in a matter of days. Even before that fantastic leap, the stock was growing at a powerful pace.
So, it wouldn’t be a stretch to say that if the stock manages to repeat its performance in the last decade for two more decades, it can easily make you a millionaire, assuming you make a sizeable enough investment in the company.
It has risen over 630% in the last decade at about 63% yearly (averaged out). If it keeps growing at the same rate, you can easily see your capital growing about 12 times in two decades. You can buy this stock at a modestly discounted (about 9%) price.
A tech company
If you want the best of both — growth rate and consistency — few stocks might be as good a choice as Constellation Software (TSX:CSU). The stock has been growing almost consistently for the last two decades and has also shown remarkable resilience against market crashes.
The company has a simple business model: it buys software businesses that offer niche/specific solutions to well-defined markets. At any given time, it has a portfolio of multiple software companies, each with its market focus and portfolio of software solutions. Currently, it has six companies under its umbrella that cater to a wide variety of industries in 100 countries.
As for the stock, it has grown quite consistently for the last two decades. In the last decade, it has returned about 1,700% to its investors. That’s about 170% a year’s growth if we average it out. The stock may offer 34 times capital growth in two decades at this rate.
Even if you don’t invest your entire TFSA capital in the two companies and allocate about $25,000 to each, you may get about $300,000 and $850,000, assuming the two stocks keep growing at the projected pace. That’s well over $1 million in two decades, with just $50,000 invested.
You can achieve the same result in the Registered Retirement Savings Plan (RRSP) as well, but if your goal is to have the funds accessible before retirement, the TFSA will win this TFSA vs. RRSP round.
The post TFSA Investors: 2 Millionaire-Maker Stocks to Buy at a Discount appeared first on The Motley Fool Canada.
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard Inc. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.