TFSA Investors: 2 Stocks to Make the Most of a Sad-Trombone Economy

TFSA investors can make the most of the heightened volatility by taking positions in stocks with tremendous resiliency amid the market noise.

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Disappointment is the general feeling of people today with all the adverse events around them. If you’re a Tax-Free Savings Account (TFSA) investor, don’t let the sound of a sad trombone dampen you. Instead, make the most of the situation and take positions in stocks that continue to beat the TSX.  

Kinaxis (TSX:KXS) is a non-dividend payer but compensates with its 19.7% year to date. Meanwhile, North West Company (TSX:NWC) is up by only 3.26% thus far in 2023 but pays an attractive 4.23% dividend. You can shut the market noise with either stock or both.

Leadership position

Kinaxis had a fantastic business performance in 2022, as evidenced by the full-year financial results. In the 12 months that ended December 31, 2022, total revenue climbed 46% year over year to US$366.88 million. Notably, profit reached US$20 million compared to the US$1.16 million net loss in 2021.

Its president and chief executive officer (CEO) John Sicard said, “Kinaxis finished the year with clear signs of momentum in the business.” Apart from exceeding the initial total revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) targets, despite currency headwinds, the customer base grew by 40%.

In addition, Kinaxis achieved the Rule of 40 performance, which means the combined growth rate and profit margin are more than 40%. The $5 billion software company provides cloud-based subscription software for supply chain operations globally.

Kinaxis delivers industry-proven applications that help clients make fast, confident decisions and plan for the future. Sicard believes the company now holds a leadership position because of its unique concurrent planning technique that combines heuristics, optimization and state-of-the-art machine learning & artificial intelligence.

Management will capitalize and take advantage of the strong demand backdrop in its markets. It will also be the key to driving a successful 2023. Kinaxis also expects the Software-as-a-Service (SaaS) revenue growth to accelerate.    

Rich enterprising legacy

The North West Company is the leading retailer of food, everyday products and services. Its captured markets are in hard-to-reach and far-flung communities in Canada, Alaska, the South Pacific and the Caribbean. The stock’s total return in 20.02 years is 2,807.27%, which translates to a compound annual growth rate (CAGR) of 18.34%.

This $1.75 billion multinational Canadian grocery and retail company has a rich enterprising legacy to protect and uphold. NWC also commits to building more collaborative relationships with the Indigenous People of Canada. After three quarters in 2022, net earnings declined 25.6% year over year to $90.7 million.

The decline in net earnings has no material effect on this low-volatile stock. At $36.73 per share, the trailing one-year price return is 2.85%. Management will present the full-year 2022 results on April 5, 2023.

For 2023, management’s first and ongoing priority is unchanged. NWC will remain in stock on essential products that most customers rely on within global supply chain disruptions. Investing to grow the business means new store openings, renovations, and expanded products and services.

Excellent prospects     

TFSA investors who desire to maximize their contribution limits still have excellent prospects, despite the elevated market volatility. Resilient stocks like Kinaxis and NWC can reward you with tax-free capital gains or dividend income.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Kinaxis and North West. The Motley Fool has a disclosure policy.

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