3 Superb Buys for TFSA Investors

Here are three top Canadian stocks to buy with your TFSA contribution this year.

| More on:
TFSA and coins

Image source: Getty Images

You must know by now that the Tax-Free Saving Account (TFSA) is not a mere saving account. You can invest in mutual funds, GICs, corporate bonds, ETFs, and publicly listed stocks in a TFSA. If you are okay with a little volatility, stocks can give much better returns than the other options. Here are three TSX stocks that offer superior return prospects for long-term TFSA investors.

Nuvei

Canada’s fintech stock Nuvei (TSX:NVEI)(NASDAQ:NVEI) has failed to maintain its upward momentum of late. First, a short report halved the stock in December, and now, rallying Treasury yields are creating a double whammy. As a result, Nuvei stock is currently trading 56% lower than its all-time high of $180 in September last year.

Despite the recent weakness, I am optimistic about the stock. An $11 billion payment processor will likely climb back to grace, fueled by its above-average financial growth.

Nuvei provides a payment platform for merchants in e-commerce, travel, cryptocurrency, and sports betting spaces. These diversified, high-margin verticals differentiate it from its peers. The management sees above 30% revenue growth annually in the medium term.

Nuvei intends to expand its geographical presence to increase its customer base. It already operates in over 200 global markets and supports 500 payment methods and 150 currencies.

NVEI has always been a high-risk, high-growth stock. In my view, its superior historical growth and strong prospects justify the stretched valuation. I think it looks attractive at current levels after a 56% drop from the peak.

Enbridge

If you are looking for a slow-moving, relatively safer option, then Enbridge (TSX:ENB)(NYSE:ENB) could be a fitting pick. Apart from safety, its decent dividend offers a steady passive income for long-term investors.

Enbridge operates oil and gas pipelines and charges companies for shipping energy commodities. Enbridge’s earnings are not directly linked to oil and gas prices and thus, offer a relatively safer investment proposition. In addition, its stable earnings facilitate stable dividends.

It currently yields 6.5%, far higher than TSX energy stocks’ average. Enbridge has increased its dividends for the last 27 consecutive years. It could continue to pay such handsome dividends in the future as well, driven by its unique pipeline network and predictable earnings.

ENB stock has returned 25% in the last 12 months, in line with the TSX Composite Index.

Constellation Software

Very few TSX stocks have been as consistent wealth creators as Constellation Software (TSX:CSU). This $45 billion tech company has returned a massive 2,800% in the last decade, notably outperforming broader markets.

Constellation acquires, manages, and builds market-leading software companies that have a leadership position in their respective areas. Its net income has grown by a 12% compound annual growth rate in the last decade, way higher than its peers.

Picking high-potential early-stage companies that suit the company’s existing portfolio has been the forte of CSU management all these years. Constellation Software stock has fallen 10% in the recent tech turmoil driven by fears of rising interest rates.

CSU stock does not look inexpensive from any traditional valuation measures despite the fall. However, its proven, differentiated business model and strong growth prospects justify the premium valuation.

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.

The Motley Fool owns and recommends Nuvei Corporation. The Motley Fool recommends Constellation Software and Enbridge. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Tech Stocks

shopping online, e-commerce
Tech Stocks

Young Investors: Shopify (TSX:SHOP) Stock May Finally Be Worth Buying

Shopify (TSX:SHOP)(NYSE:SHOP) stock is attempting to stage a bottom, but should investors be buyers amid the market chaos?

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Tech Stocks

How to Easily Turn a $25,000 RRSP Into $250,000

You can hold quality growth stocks such as Shopify in your RRSP and benefit from market-beating gains in the long…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Kinaxis vs. Descartes: Which Is the Better Tech Stock to Buy?

Top tech stocks like Kinaxis Inc. (TSX:KXS) and Descartes Systems Group Inc. (TSX:DSG)(NASDAQ:DSGX) are worth your attention right now.

Read more »

tech and analysis
Tech Stocks

2 Top Tech Stocks Investors Should Consider Buying Right Now

Tech stocks such as Sierra Wireless and Open Text are well positioned to deliver outsized gains to investors in 2022…

Read more »

cup of cappuccino with a sad face
Tech Stocks

Shopify (TSX:SHOP) Stock Has Been a Bloodbath

The share price of the TSX’s tech phenomenon could still plunge if the bloodbath continues due to the slowdown of…

Read more »

sad concerned deep in thought
Tech Stocks

Tech Stocks Crumble: Is it Time to Buy?

Shopify is coming down from its pandemic highs as its business falters, but BlackBerry's business is just gaining steam.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Tech Stocks

This 1 High-Growth Stock Just Got Irresistible

Despite a challenging macro environment, Lightspeed continues to post strong growth, which could help this high-growth stock stage a sharp…

Read more »

exchange-traded funds
Tech Stocks

Buy the Dip: 3 ETFs That Have Taken a Beating in 2022

Three prominent TSX ETFs trades at bargain prices in 2022 because of their significant exposure to the slumping technology sector.

Read more »