If you’ve yet to contribute $6,000 to your Tax-Free Savings Account (TFSA) this year, now is a great time, if you’re able, as you look to invest the proceeds in the best TSX stocks out there. Despite the strong market, there are still ample bargains out there. You’ve just got to know where to look. In this piece, we’ll look at three terrific value picks to stash in your TFSA.
TFSA top stock #1: Restaurant Brands International
Restaurant Brands International (TSX:QSR)(NYSE:QSR) got caught offside when the coronavirus pandemic struck earlier last year. The company behind Tim Hortons, Burger King, and Popeyes Louisiana Kitchen was more at risk of impending dining room closures versus the likes of its tech-savvier peers, who were more up to speed with mobile ordering tech drive-thru, and delivery.
As the economy and dining rooms reopen, Restaurant Brands has a lot to win. Looking way into the future, Restaurant Brands is also investing heavily to modernize its locations. With Burger King, the company is betting big on drive-thru and takeout, with some stores to be reinvented for the digital age, with multiple drive-thru lanes, pickup cubbies or burger lockers, and all sorts of appealing tech that would make you think you’re at a fast-food restaurant of the future. Think conveyor belts, walk-up windows, and mobile ordering perks. All of which may be coming soon to the Burger King near you.
Restaurant Brands may have fallen behind the times before the pandemic struck, but it’s going to compensate, and in doing so, it could be starting an industry trend. Plain and simple, QSR stock is a great TFSA buy while it’s still down and out.
TFSA top stock #2: TC Energy
TC Energy (TSX:TRP)(NYSE:TRP) is one of my favourite pipeline plays. The management team has done a great job of diversifying geographically and the types of energy it transports. As one of few energy plays to rebound from the 2014 downturn in oil, I think TC still doesn’t get the respect it deserves. It’s a resilient firm, and it’ll bounce back from the coronavirus crisis, perhaps far sooner than doubters expect.
For now, the stock is under considerable pressure such that the dividend yield has swelled to 6%. I’d say TFSA investors should reach for the well-supported payout as they wait for industry headwinds to fade further and for the company to reap the rewards of its vast pipeline of projects.
At 12.4 times trailing earnings, TRP stock is way too cheap to ignore, especially given the odds that a clean energy bubble burst could spark a rotation back into the fossil fuel plays, especially the cash-rich midstream players like TC Energy a best-in-breed player with outstanding fundamentals.
TFSA top stock #3: NFI Group
What a fall from grace NFI Group (TSX:NFI) stock has suffered over these past few years. The stock lost over 77% of its value from its 2018 peak to its 2020 trough. Now, shares are beginning to pick up traction, and I don’t think they’ll slow down anytime soon. Not with the incredible recovery trajectory that could lie ahead in an environment that some may be inclined to describe as the roaring 2020s.
NFI is a manufacturer of environmentally-friendly buses, which will likely be in high demand again once the pandemic ends. Moreover, with amped-up infrastructure spending likely in the cards, I find NFI Group to be a top industrial to benefit, as we enter what appears to be a strong expansionary phase of a new bull market.
NFI is best-in-breed, and it’s still ridiculously cheap at 0.7 times sales and 2.3 times book, making the name a great bargain for any long-term-focused TFSA growth fund.
The following names are high-upside TSX bets to play the great reopening. If I had to pick one, I’d have to go with Restaurant Brands. It’s making up for lost time with its latest restaurant modernization efforts, and think it’ll pay huge dividends down the road. Stash it in your TFSA!
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette owns shares of RESTAURANT BRANDS INTERNATIONAL INC. The Motley Fool recommends NFI Group and RESTAURANT BRANDS INTERNATIONAL INC.