Got $3,000? 2 TSX Stocks to Turn it Into $200K

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With the recent volatility in the stock market, it may not seem like an opportunistic time to be investing. But for patient investors with a long-term time horizon, now is as good a time as any to be putting money into the Canadian stock market. 

The TSX is full of market-leading stocks trading at must-buy prices. I’ve reviewed two TSX stocks that have the potential of turning a $3,000 investment into more than $200,000. Aside from $3,000, the only thing investors will need is time. 

The magic of compound interest

It’s through compound interest that an initial investment of $3,000 could grow into almost a quarter-million dollars by doing nothing but waiting patiently. 

Let’s look at a few specific examples to highlight the massive difference just a couple of percent on an average annual return can impact a portfolio over the long term.

To start, let’s use an average annual return of 8%, which we can consider the long-term average return of the Canadian stock market. An investment of $3,000 made today, growing at an average annual return of 8%, would be worth just about $30,000 in 30 years.

Now, let’s say that $3,000 is instead invested into a couple of different TSX stocks that average an annual return of 15%. A $3,000 investment would then be worth just shy of $200,000 in 30 years.

Let’s take it a step further and assume that during those 30 years, an additional investment of $100 was made each month at the same return rate of 15%. The portfolio would be worth more than $700,000 in 30 years.

Achieving an average annual return of 15% may be easier said than done. Still, there are plenty of TSX stocks with long track records of returning 15% in growth annually. Here are two top growth stocks that have done exactly that in recent years. 

TSX stock #1: Constellation Software

Constellation Software (TSX:CSU) is no stranger to crushing the Canadian market’s returns. The tech stock has been amongst the top-performing TSX stocks since it went public just over 15 years ago.

Growth has slowed in recent years, but Constellation Software is still a leader in the Canadian tech industry. 

Shares of the $40 billion company have returned close to 200% over the past five years. That’s good enough for an average annual return above 20%.

TSX stock #2: goeasy

goeasy (TSX:GSY) is another under-the-radar growth stock with a consistent market-beating track record. The company is also still only valued at a market cap of less than $2 billion, leaving plenty of multi-bagger growth potential for the coming years.

Shares of the consumer-facing financial services company are up more than 250% over the past five years. In comparison, the S&P/TSX Composite Index has returned barely over 30% in the same time span.

goeasy’s growth over the past five years equals an average annual return of close to 30%.

Alongside many other TSX stocks, goeasy has been hit with a selloff as of late. The growth stock is down about 40% over the past six months.

If you’ve had goeasy on your watch list, now’s the time to be investing. Who knows when we’ll see another buying opportunity like this?

The post Got $3,000? 2 TSX Stocks to Turn it Into $200K appeared first on The Motley Fool Canada.

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* Returns as of 4/14/22

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More reading

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Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software.

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