TFSA Investors: 3 TSX Stocks to Outperform the Market

Here are three of the top TSX stocks that are slated to outperform the market in a turbulent 2023, making them perfect for TFSA investors.

| More on:
grow dividends

Image source: Getty Images

As we near the halfway mark of the first month of 2023, it is safe to say that it will be yet another year of mixed expectations for Canadian investors. 2022 saw all kinds of volatility plague the market. Between the inflationary environment and rising interest rates, fears of a recession were high, and the momentum has carried forward to the new year.

The start of another year of stock market investing also came with more contribution room being announced for Tax-Free Savings Accounts (TFSAs). With $6,500 in additional room, it might be a good time to assess your options and make your picks. Today, I will discuss three TSX stocks that could outperform the broader market if volatility and uncertainty continue.

Barrick Gold

Gold stocks like Barrick Gold (TSX:ABX) can be an excellent way to gain exposure to gold. One of the largest gold miners, this Toronto-based $44.71 billion market capitalization company can be an excellent way for investors to profit off rising gold prices while earning dividends as they wait.

As of this writing, Barrick Gold stock trades for $25.41 per share, up by 41.32% from its November 2022 low. The surge indicates rising recessionary fears from investors, and if the broader downturn persists, Barrick Gold stock prices can rally further.

You must be careful with how much you allocate to the gold stock, because the rare yellow metal tends to move in the opposite direction to the rest of the market. If the economy begins growing, Barrick Gold’s share price might decline.

goeasy

goeasy (TSX:GSY) can be an excellent pick for investors in the current economic situation. The $1.83 billion market capitalization company based in Mississauga is a sub-prime lender offering loans to borrowers who cannot qualify for high-quality loans from traditional lenders.

The company offers short-term loans at higher interest rates to people facing cash crunches due to inflation. The environment is ripe for a growing demand for such loans, and goeasy stock has seen that surge happen.

Its third quarter for the previous fiscal year saw an almost 50% growth in its loan origination. Tightening lending practices from traditional lenders favor sub-prime lenders like goeasy stock, and it can be well-positioned to see further boosts to its business this year. As of this writing, goeasy stock trades for $111.27 per share, up by 8.12% from its December 2022 level.

Dollarama

Dollarama (TSX:DOL) is another excellent pick for investors seeking stocks that can outperform the broader market in a turbulent environment.

An all-weather Canadian stock, Dollarama outperformed the market weakness last year and can continue to do the same this year. The $23.53 billion market capitalization dollar-store retail chain headquartered in Montreal thrives in harsh market environments due to its business model.

By offering essential items for $5 or less, Dollarama sees business grow during inflationary and high-interest-rate environments. Consumers look for affordability during cash crunches, and Dollarama offers them the perfect solution.

As of this writing, Dollarama stock trades for $81.93 per share, up by 32.57% from 12 months ago. With stable earnings growth, margin stability in all business cycles, and a management aiming for constant topline growth, it can be an excellent addition to your TFSA.

Foolish takeaway

When using the contribution room available in a TFSA, it is a good idea to diversify and spread money across stocks with the potential to outperform the market by reacting differently to news.

Stock market investing is inherently risky, and 2023 seems uncertain right now. It is the season to buy the dip, and these three stocks can be good additions to your portfolio for tax-free returns based on how things begin to shape up this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »