A volatile market provides investors a chance to make money. For example, the ideal time to invest in Canadian equities this year was in mid-March when markets bottomed out. The iShares S&P/TSX 60 Index ETF has rebounded 40% in fewer than three months.
There may be a market crash on the horizon. But as we know, it’s impossible to time the markets, and if the market recovery continues, investors will not get a chance to buy the dip, at least in the near future.
You can instead look to buy stocks that continue to trade at a discount. The TFSA (Tax-Free Savings Account) contribution room for 2020 stands at $6,000. Canadians can add the below TSX stocks to their TFSA portfolio and benefit from tax-free gains.
Why Docebo is ideal for your TFSA
As any withdrawals from the TFSA are tax-free, it makes sense to leverage this benefit and invest in growth stocks. Small-cap growth stocks have the potential to create massive wealth over time.
Canada’s Docebo (TSX:DCBO) is one such stock that will soon become an investor favourite. The company has a market cap of $787 million and is fast gaining traction in the enterprise e-learning space.
Docebo’s platform provides companies with a way to access e-learning solutions. This cloud-based solution is used by 1,900 organizations, including Appian, Walmart, and Thomson Reuters.
Docebo stock is trading at $27.65 and has gained 170% since touching a record low of $10.3 in March 2020. Analysts tracking Docebo expect its sales to reach $78.5 million in 2021, up from $58.7 million in 2019. This means the stock has a market cap to forward 2021 sales multiple of 10, which is reasonable considering its growth rates.
Further, Docebo is also expected to improve earnings from -$0.49 in 2019 to -$0.08 in 2021. It is forecast to reach non-GAAP profitability by 2022. Docebo continues to focus on organic growth and new product offerings to expand the customer base and is one of the top picks for long-term investors.
A beaten-down retail company
Retail stocks have been decimated in recent times due to countrywide lockdowns and lower consumer spending. Shares of Canada-based clothing manufacturer, Gildan Activewear (TSX:GIL)(NYSE:GIL) are trading at $24.08, which is 55% below its 52-week high. Similar to most other stocks, Gildan has also made a comeback since March 2020 and is up 90% since the sell-off.
Analysts expect the company to post a sales decline of 40% in 2020. Sales were down 26% in Q1 and are estimated to fall 68% in Q2 and 42% in Q3. However, revenue is forecast to rise by 32.4% to US$2.25 billion in 2021. With a market cap of US$3.55 billion, the stock has a forward price-to-sales multiple of just 1.6.
The massive revenue decline will result in an 86% fall in profit margins. Analysts then expect Gildan to improve earnings by 422% in 2021 to US$1.2, indicating a price to 2021 earnings of 15.
The recent market pullback is an opportunity to buy quality stocks at a lower valuation. A $6,000 investment right now in these two stocks can multiply your wealth in the upcoming decade.