The recent correction in the stock market indicates that now is the time for TFSA investors to buy some of the top TSX stocks for outsized returns in the long term. While several TSX stocks are trading cheap, here are my top three picks to buy with $6,000 (annual contribution for TFSA).
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Shopify
Shopify (TSX: SHOP)(NYSE:SHOP) stock has corrected about 67% in six months. Numerous factors, including the reopening of the world, normalization in demand, and tough comparisons, weighed on Shopify’s growth and stock price. Moreover, high inflation, rising interest rates, geopolitical conflict, and pressure on margins from accelerated investments further remained a drag.
Looking ahead, Shopify warned that the first half of this year would remain challenging. Moreover, the growth will slow down further in Q1. However, the significant correction in Shopify stock indicates that negatives are already priced in. Additionally, this correction represents a solid opportunity for TFSA investors to accumulate it at current levels.
Shopify’s accelerated investments in internet commerce infrastructure position it well to capitalize on the digital shift. Moreover, expansion of its payments solutions, strengthening of its fulfillment network, product launches, and addition of new marketing and sales channels bode well for growth. Its valuation is at a multi-year low, while growth is expected to re-accelerate as the year progresses.
BlackBerry
Shares of BlackBerry (TSX: BB)(NYSE: BB) have corrected more than 46% in six months. The general selling in the high-growth stocks took a toll on BlackBerry stock. Nevertheless, I see this pullback in BlackBerry stock as an opportunity for TFSA investors to go long.
BlackBerry continues to grow rapidly, reflected through the continued strength in billings, solid annual recurring revenue, and high retention rate. Further, BlackBerry is poised to deliver robust growth due to the accelerated pace of digital shift, higher enterprise spending on cybersecurity, and automation and electrification in the automotive sector.
Moreover, its large addressable market, focus on innovation, new customer acquisitions, and solid recurring software product revenue provide a solid growth platform.
Lightspeed
Due to the massive correction in Lightspeed (TSX: LSPD)(NYSE: LSPD) stock, it is too cheap to ignore at current levels and a solid long-term bet for TFSA investors. Lightspeed stock fell about 77% in six months and is trading at an EV/sales multiple of 3.6, representing a substantial discount to its historical average.
While Lightspeed is trading cheap, its organic growth rate continues to impress. Lightspeed posted organic growth of 74% in its subscription and transaction-based revenue during the last reported quarter. Furthermore, Lightspeed’s management remains optimistic and expects to deliver organic growth of 35-40% per annum in the coming years.
The ongoing migration of small- and medium-sized businesses towards omnichannel selling models will likely drive demand for Lightspeed’s digital products. Meanwhile, the growing penetration of payment solutions, product expansion, increased revenue from the existing customers, and customer growth augurs well for growth. Also, opportunistic acquisitions and international expansion will likely accelerate its growth.
