Despite broader market fluctuations, TFSA (Tax-Free Savings Account) investors should focus on long-term strategies allowing them to benefit from compounded gains. As it’s impossible to predict the market bottom, the ongoing volatility allows you to buy quality stocks for your TFSA at a discount.
While bear markets are brutal, it is also the best time to put your capital to work and build generational wealth. Previous downturns, such as the COVID-19 market crash and the financial market crisis, were quite bumpy for investors, but they inevitably paved the way for an elongated bull run.
Right now, investment sentiment is bearish, allowing companies to outpace estimates and surprise Bay Street, which may result in outsized gains. So, the time is ripe for those looking to make consistent returns on TFSA investments.
With these factors in mind, these three TSX stocks can supercharge your TFSA in 2023.
Lithium Royalty stock
A small-cap stock valued at $840 million, Lithium Royalty (TSX: LIRC) aims to develop a portfolio of royalty interests with an emphasis on lithium. It is targeting lithium over other battery metals due to its robust growth profile driven by EV, or electric vehicle, demand. LIRC stock thus offers investors a chance to diversify their TFSA portfolios and lower overall risk.
Lithium Royalty is composed of 30 royalties on 28 properties. Now, just two properties are in production, while four properties are in construction, and the rest are in the development or exploration stage.
Analysts expect Lithium Royalty to report sales of $20.6 million in 2023 and $47 million in 2024, up from $1.7 million in 2022.
With a presence in seven countries, Lithium Royalty has already closed five acquisitions in 2023. Its diversified and low-life asset base makes the stock a top long-term bet for your TFSA today.
Aritzia stock
Down 40% from all-time highs, Aritzia (TSX: ATZ) stock should be on top of your shopping list in 2023. A vertically integrated luxury design house, Aritzia reported revenue growth of 44% in the fourth quarter (Q4) of fiscal 2023 (ended in February).
In the last 12 months, net sales were up a stellar 47%, despite a tepid macro environment. In the U.S., top-line growth stood at 66% in fiscal 2023, and the country now accounts for more than 50% of total sales.
Due to the re-opening of brick-and-mortar stores, retail sales were up 53%, while online revenue increased 36% in fiscal 2023. The company now aims to focus on operational efficiencies and manage costs while continuing to open additional stores in Canada and south of the border.
Priced at 26 times forward earnings, Aritzia’s adjusted earnings are forecast to surge over 20% annually in the next five years.
Celestica stock
The final TSX stock on my list is Celestica (TSX: CLS), a tech company that provides enterprise-facing supply chain solutions. Priced at just 5.3 times forward earnings, CLS stock is among the cheapest companies on the TSX and trades at a discount of 35% to consensus price target estimates.
Its sales were up 17.5% year over year in Q1 of 2023, while adjusted free cash flow stood at US$9.2 million compared to less than US$1 million in the year-ago period.
The demand for supply chain solutions is forecast to remain robust in the upcoming decade as companies look to optimize costs, making CLS a top TSX stock today.
