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).
Like the parabolic potential of BlackBerry? These other top picks have even more parabolic growth potential!
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Chris MacDonald has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.