To encourage its citizens to save more, the Canadian government introduced the TFSA (Tax-Free Savings Account) in 2009. It allows investors to earn tax-free returns on a specified amount called contribution room. For 2022, the Canadian Revenue Agency has fixed the contribution room at $6,000, while the cumulative amount stands at $75,500. If you have not maxed out on the limit, here are four top Canadian stocks that you can add to your TFSA right now.
Bank of Nova Scotia
With inflation at its peak, investors expect the Federal Reserve of the United States to increase its interest rates as soon as next month. An increase in interest rate could widen the spread between lending and deposit rate, thus driving the profitability of financial service companies. So, given the favourable business environment, I have selected Bank of Nova Scotia (TSX: BNS)(NYSE: BNS) as my first pick.
The improved business environment could drive loan volumes, benefiting the company. Its diversified revenue streams, exposure to high-growth markets, lower provisions, and operating leverage could boost its financials in the coming quarters. The company also rewards its shareholders with quarterly dividends and share repurchases. Its forward yield currently stands at 4.34%. So, given its healthy growth prospects and an attractive forward price-to-earnings multiple of 11.1, I am bullish on the Bank of Nova Scotia.
Waste Connections
Waste Connections (TSX: WCN)(NYSE: WCN) provides solid waste collection, transfer, and disposal services in secondary or exclusive markets. With the economic expansion, the demand for the company’s services could rise in the coming quarters. Amid higher oil prices, the exploration and production activities have increased, driving the company’s revenue from the segment.
Waste Connections also focuses on completing strategic acquisitions to expand geographically and strengthen its competitive positioning. In the first three quarters of 2021, the company has made acquisitions worth US$240 million, which could increase its annualized revenue by US$100-US$150 million. With its cash and cash equivalents at $340 million, the company is well equipped to continue its future acquisitions. So, given its business’s growth prospects and essential nature, I expect Waste Connections to outperform the broader equity markets this year.
BlackBerry
Given its multiple growth drivers, BlackBerry (TSX: BB)(NYSE: BB) would be an excellent stock to add to your TFSA. With the rising software components in vehicles, many auto manufacturers are partnering with BlackBerry to utilize its Intelligent Vehicle Data Platform, IVY, to enhance their vehicles’ performance and improve customer experience. Further, the company looks to strengthen its position in the EV market, thanks to design wins.
The rising spending on cybersecurity amid digitization is expanding the addressable market for BlackBerry. With its new innovative products, the company is well positioned to capitalize on the market expansion. Further, the company recently agreed to sell its non-core patents for $600 million, strengthening its financial position. So, given its healthy growth prospects and discounted stock price, I expect BlackBerry to deliver superior returns over the next three years.
Nuvei
My final pick is Nuvei (TSX: NVEI)(NASDAQ: NVEI), an electronic payment-processing company operating in 200 markets worldwide and supporting over 500 local and alternative payment methods. With the growth in e-commerce, digital transactions are becoming popular. Meanwhile, the company is increasing its geographical footprint, venturing into new business segments, adding new services, and making strategic acquisitions to drive growth.
Nuvei has been strengthening its position in the sports betting and iGaming sector through geographical expansion and client base expansion by adding prominent operators. So, the company has healthy growth potential. However, amid the recent pullback in growth stocks, the company has lost over 50% of its stock value compared to its September highs. So, investors should utilize the steep correction to accumulate the stock to earn superior returns.
