The stocks investors want to put in their Tax-Free Savings Accounts (TFSA) are typically of the high-growth nature. Taking advantage of tax-free capital gains is a huge deal. In the case of companies like BlackBerry (TSX:BB)(NYSE:BB) with incredible growth potential, a TFSA is definitely the right investment vehicle.
We haven’t even seen the growth yet
Expectations about outsized growth on the horizon have driven shares of BlackBerry to fresh 52-week highs of late. However, the fact remains, we haven’t seen this growth materialize yet.
Speculation is one thing, but making a well-educated prediction of future cash flows is what investing is all about. Thus, I don’t think BlackBerry is a speculative play inasmuch as this is a stock with an incredible amount of growth potential. My newfound bullishness on BlackBerry is derived from a recent partnership the company has put in place with Amazon.com.
As I wrote in a recent article, “The software BlackBerry is developing to enhance the analytics and big data needs of the future could be game-changing. The company’s Intelligent Vehicle Data Platform (IVY) provides for improved data collection from vehicle sensors. Accordingly, big data possibilities that did not exist tomorrow in improving the performance of next-generation vehicles now exist. The potential benefits of this technology are incredible, and I think BlackBerry and Amazon are positioned well to take this market by storm.”
I think BlackBerry is finally on the cusp of generating impressive growth each and every quarter. Of course, until this growth materializes, there is a degree of speculation built into this stock right now.
All that said, I think BlackBerry is on the verge of an extended parabolic move higher. There’s a lot to like about the company’s deal with Amazon, which I think could be transformational in this sector. Additionally, I think BlackBerry’s depressed valuation multiple in the past has set this stock up for tremendous stock price appreciation on the horizon.
Indeed, when one looks at where other high-growth software and technology stocks are trading at in terms of valuation, BlackBerry is dirt cheap. If you believe in BlackBerry’s growth potential as I do, this is a no-brainer for growth-oriented investors. For investors looking to capture the greatest return over time, I’d recommend this stock as a TFSA holding.
As with other high-flying technology stocks, risks do exist today. The high valuations of this sector expose investors to high levels of downside in a market correction. I’d recommend Foolish investors consider owning a highly diversified portfolio of stocks across different sectors and investing styles (i.e., sprinkle some value in with your growth).