It’s time for Motley Fool investors to get serious about their Tax-Free Savings Account (TFSA) — especially new TFSA investors who have taken advantage of the last two years and suddenly are seeing shares drop. Over the last two years, practically every company could be considered growth stocks. But that’s not true today.
So, now, it’s time to juggle investments. Take the returns from volatile stocks and put them somewhere much more stable and, therefore, safe. Here are two growth stocks you can consider replacing volatile stocks with.
Dollarama
Dollarama (TSX:DOL) shares just jumped 6% after the company reported solid earnings. Shares are now up 13% year to date and 95% over the last five years. Analysts believe Dollarama stock should only keep climbing.
Why? The company proved during the pandemic that it has a solid growth portfolio with more room to run. Dollarama stock was able to keep its doors open since it sells essential goods. Enter inflation, and Dollarama is able to remain a strong investment. That’s because the company keeps prices down for as long as possible, only raising them once the market as a whole has done so.
Furthermore, Dollarama stock now offers higher-quality goods besides its cheap stuff. This allows every type of consumer to head to Dollarama for their purchases. It’s no wonder the company is able to keep opening stores and see revenue rising.
In fact, same-store sales rose 1.7% year over year, with traffic up 4%, as strong demand continues and COVID-19 eases. Furthermore, EBITDA was up 13.4% to $1.28 billion, which helped the company raise its dividend by 10% compared to other growth stocks.
Constellation Software
Constellation Software (TSX:CSU) falls into both the tech and growth categories beautifully. Shares of Constellation stock have increased 231% in the last five years as of writing and yet are down 8% year to date.
This comes from the fall in tech stocks but has nothing to do with Constellation stock and its performance. The company has a stellar model of acquiring software businesses, with a management team that’s honed into what will be successful. This has led to solid, stable growth over the last several years.
And that’s the key. Constellation stock has a proven track record of bringing in funds. This is why, while other tech stocks have fallen by double digits in terms of percentages, Constellation remains fairly stable.
Revenue during the last earnings report grew 27% year over year in the fourth quarter. It achieved several new acquisitions and has even more lined up for this year. Net income was down 17% but still came in at $5.86 on a diluted earnings-per-share basis.
Furthermore, you can pick up a dividend from this stock — something tech stocks and many growth stocks don’t even offer. And given that Motley Fool investors will continue to see a future filled with software needs, this is a solid long-term buy for any TFSA investor.
