Canadians need to leverage the benefits of the TFSA (Tax-Free Savings Account) to help them create a nest egg for retirement. The TFSA was introduced in 2009 and is a popular registered account in Canada due to the flexibility it offers.
As the TFSA is a tax-advantaged account, it makes sense to hold a portfolio of quality growth stocks and benefit from outsized gains over time. For instance, if you held $1,000 worth of Apple stock 10 years back in your TFSA, the investment would be worth over $10,000 today.
Here are two such growth stocks you can buy and hold in the TFSA to turbocharge your retirement portfolio.
Datadog stock
One of the fastest-growing tech stocks south of the border, Datadog (NASDAQ: DDOG) reported sales of US$482 million in the March quarter, an increase of 33% year over year. It ended the first quarter (Q1) with 25,500 customers, up from 19,800 in the year-ago period. Further, 2,910 customers now generate annual recurring revenue (ARR) of more than US$100,000, accounting for 85% of total ARR.
Unlike several other tech stocks, Datadog continues to generate consistent profits. Its free cash flow in the March quarter stood at US$116 million, indicating a margin of 24%.
The company continues to deliver new use cases for existing customers, which results in higher spending and robust retention rates. For instance, 43% of customers use at least four products, up from 35% in the prior-year quarter. The number of customers using six or more products has also risen from 12-19% in this period.
In the last 12 months, Datadog’s dollar-based net retention rate stood over 130%, which suggests existing customers increased spending by 130%. As customers increase their usage and adopt more products, Datadog is on track to increase sales by 25% to US$2.1 billion in 2023 and by 27% to US$2.66 billion in 2024.
Datadog ended the quarter with $2 billion in cash, providing it with enough resources to reinvest in growth and pursue highly accretive acquisitions.
Nuvei stock
Valued at a market cap of $5 billion, Nuvei (TSX: NVEI) stock is trading 80% below all-time highs, allowing you to buy the dip. A company operating in the fintech space, Nuvei increased sales by 20% to US$256.5 million in Q1 of 2023. If we exclude the growth in cryptocurrencies, sales were up 26% year over year. Nuvei’s e-commerce sales (excluding cryptos) were up 37% at US$156.8 million.
Its technology investments in Q1 rose 40%, while capital expenditures were in line with the company’s medium-term range.
Nuvei is primarily a payment technology solutions company with customers in North America, Europe, Asia, Africa, and Latin America. Nuvei added several alternative payment methods allowing customers to accept additional forms of payments, which should result in higher spending on its platform.
The total volume of payments processed on Nuvei has surged 45% to US$42.4 billion in Q1. Analysts expect Nuvei to increase sales by 45% to US$1.64 billion in 2023. Priced at three times forward sales and 13 times forward earnings, NVEI stock is quite cheap for a growth company. It currently trades at a discount of 100% compared to consensus price target estimates.
