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How to Make a $1 Million TFSA Portfolio: Buy This Top TSX Tech Stock

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Looking to take your Tax-Free Savings Account (TFSA) into the seven digits? There are a few companies I think possess the growth potential to do so in a reasonable time frame.

One such company is Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX). This stock has been a 12-bagger over the past 15 years. How? This company has a proven business model, and has been one of the steadiest growth plays on the TSX for decades. Accordingly, patient investors have been well-rewarded with holding onto this gem long-term.

Business model built for growth

Open Text is a cloud and site-based enterprise management company. This company provides software and solutions to 10,000 companies globally. Additionally, the installed base of 100,000 end users has continued to grow at a rapid pace.

Why? This company is one of the best acquirers on the TSX.

Open Text has deployed around $6 billion over the past ten years in a series of acquisitions. These acquisitions have provided a high level of growth that has been profitable as well.

Over the long term, a ton of opportunity remains for acquisitions that fit Open Text’s profile. The software sector is one that remains fragmented. Accordingly, for Open Text, this is extremely beneficial. Indeed, the tremendous amount of opportunity that exists provides Open Text and its shareholders with a very attractive long-term runway for growth.

The high level of recurring revenue Open Text provides is very enticing. Around 90% of the company’s revenues are recurring, providing investors with cash flow stability and a pretty clear view of where revenue and earnings are expected to be down the line.

Open Text’s diversified growth profile should also be taken into consideration. Essentially, Open Text earns the majority of its revenues outside of Canada. Accordingly, investors with too much domestic exposure would be well served by this stock.

Bottom line

Open Text is perhaps one of the best growth-by-acquisition plays on the TSX right now. Accordingly, those seeking growth in their TFSA ought to consider this stock right now. I think investors looking to build a $1 million TFSA won’t do so overnight with this stock. However, over the long-term, such a return is certainly within the realm of possibility.

Open Text is certainly an expensive stock these days but show me a growth play in the software space that isn’t.

However, Open Text is fully deserving of this multiple. The company’s recurring revenue business model offers a level of cash flow stability few of its peers can compare with. Additionally, the incredible growth potential via acquisitions on the horizon makes this stock appear to be well valued at these levels.

Like this top TSX growth stock? Here are 10 more to consider right now:

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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Open Text and OPEN TEXT CORP.

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