The Tax-Free Savings Account, or TFSA, was introduced in Canada back in 2009 to encourage savings. Any withdrawals from this registered account in the form of capital gains, interests, or dividends are exempt from Canada Revenue Agency taxes, making the TFSA ideal to hold growth stocks.
The maximum contribution limit for your TFSA in 2009 stands at $6,000. Let’s look at two quality growth stocks you can buy today that have the potential to turn $6,000 to $60,000 by the end of the current decade.
Ballard Power Systems
A company valued at a market cap of $4.4 billion, Ballard Power Systems (TSX:BLDP)(NASDAQ:BLDP) designs, develops, manufactures, and sells proton exchange membrane (PEM) fuel cell products. It has the potential to lead innovation in the clean energy space by offering a robust portfolio of fuel cell solutions that power transportation vehicles such as buses and trucks.
The shift towards clean energy is accelerating rapidly at the global level, and Ballard Power has the opportunity to gain traction in several international markets. Several countries are already using Ballard’s fuel cells to power heavy-duty vehicles, including ships.
While Ballard Power’s sales have fallen from US$106.3 million in 2019 to US$104 million in 2021, Ballard Power may have touched an inflection point. In Q4 of 2021, revenue was up 28% year over year at US$36.7 million. Analysts tracking the stock now expect sales to rise by 12.7% to US$147 million in 2022 and by 43.4% to US$211 million in 2023.
Ballard Power stock is down 72% from all-time highs, allowing investors to buy the dip. However, investors should understand that BLDP stock is still valued at a forward price-to-2022 sales multiple of 24, which is quite steep for a loss-making company. Analysts tracking the stock have a 12-month average price target of US$22.7, which indicates an upside potential of 100% from current levels.
Roku
One of the largest players in the streaming space, Roku (NASDAQ:ROKU) should be part of your shopping list today. Similar to most other growth stocks, Roku is also down 72% from all-time highs, valuing the company at US$17.58 billion by market cap.
ROKU stock disappointed investors, as it reported Q4 sales of US$865 million, which was below the low end of its guidance range between US$885 million and US$900 million. However, its top line still grew 49% year over year in Q4 of 2021.
Roku derives a majority of its revenue from its platform business where it also sells ad space to enterprises. In Q4, platform sales accounted for 81% of total revenue. In the last four years, platform sales have risen from US$85.4 million in Q4 of 2017 to US$703.6 million in Q4 of 2021.
Analysts now expect Roku sales to rise by 34.7% to US$3.72 billion in 2022 and by 29.7% to US$4.83 billion in 2023. So, Roku stock is valued at a forward price-to-sales multiple of 4.72, which is very reasonable, given its growth forecasts.
Wall Street expects Roku stock to touch US$200 in the next 12 months, which is upside of 54% from current levels.
