To encourage its citizens to save more, the Canadian government implemented TFSA (Tax-Free Savings Account) in 2009. Investors can earn tax-free returns on a specified amount called contribution room by investing through the account. This year, the Canadian Revenue Agency has fixed the contribution room at $6,000, with the cumulative amount at $81,500.
So, if you have not maxed out your limit, here are my three top bets. These three stocks could help create substantial wealth, given their long-term growth prospects.
goeasy
goeasy (TSX:GSY), which offers financial services to sub-prime customers, is my first pick. With the sub-prime lending market being highly fragmented, the company has substantial scope for expansion. It is expanding its product range, strengthening its distribution channels, increasing its penetration, and making strategic acquisitions to increase its market share.
The company has planned to open 30-40 new easyfinancial locations over the next three years. The economic expansion amid the easing of restrictions could raise the demand for the company’s services. So, given its growth initiatives and favorable market conditions, the management expects its loan portfolio to increase by 78% over the next three years to reach $3.6 billion by 2024. Despite its high-growth prospects, the company trades at an attractive NTM price-to-earnings multiple of 11.7. It has also raised its dividends at an annualized rate of over 34% since 2014. So, considering all these factors, I am bullish on goeasy.
Nuvei
Nuvei (TSX:NVEI)(NASDAQ:NVEI) provides pay-in and pay-out services for businesses worldwide utilizing its proprietary platform, which supports 530 alternative payment methods, including cryptocurrencies. With the increased adoption of online shopping, digital payments are becoming popular and expanding the company’s addressable market. The company is also expanding its geographical footprint, introducing innovative products, and making strategic acquisitions, which could increase its market share in the coming years.
Further, Nuvei also services regulated online gaming and sports betting operators. It owns licences to support regulated operators in over 10 U.S. states and Ontario. However, amid the selloff in growth stocks, the company is trading at over a 47% discount from its September highs. So, given its long-term growth potential and discounted stock price, I expect Nuvei to deliver solid returns in the long run.
Canadian Natural Resources
The ongoing Russia-Ukraine war and the subsequent banning of Russian oil by the United States and some European countries have driven oil prices above US$100/barrel. With OPEC+ countries struggling to increase their output and the rising demand amid economic expansion, I expect oil to trade at higher levels in the near to medium term. Given the favourable environment, I have selected Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) as my third pick.
Further, the company is also investing $3.6 billion to strengthen its production capabilities this year. The decline in debt levels and share repurchases could also boost its financials this year. Meanwhile, the company also rewards its shareholders by consistently raising its dividend. It has increased its dividend for the previous 22 years, with its forward yield currently at 3.8%. Meanwhile, the company’s NTM price-to-earnings also looks attractive at 7.6. So, considering all these factors, I believe Canadian Natural Resources to be an excellent addition to your TFSA.
