Last year, the federal government announced that the annual contribution limit for the Tax-Free Savings Account (TFSA) would be increased to $6,500. That brings the cumulative contribution room to $88,000 for investors who have qualified to invest in a registered account since January 2009. Younger Canadian investors may have a lower cumulative contribution room depending on when they reach the age of eligibility.
Today, I want to zero in on three TSX stocks that are the perfect target for our $6,500 contribution. Let’s jump in.
This is the first TSX stock I’d look to buy on the dip in late July
Aritzia (TSX:ATZ) is a Vancouver-based company that designs and sells apparel and accessories for women in the United States and Canada. Shares of this TSX stock have plunged 23% month over month as of early afternoon trading on Thursday, July 20. The stock has fallen 41% so far in 2023. Investors can see more of its recent performance with the interactive price chart below.
This company released its first quarter (Q1) fiscal 2024 earnings on July 11. Aritzia delivered net revenue growth of 13% to $462 million. Moreover, the company posted double-digit percentage net revenue growth in its United States, Retail, and e-commerce segments. EBITDA stands for earnings before interest, taxes, depreciation, and amortization; it aims to give a better picture of a company’s profitability. Aritzia posted adjusted EBITDA of $31.6 million in Q1 — down 54% compared to the previous year.
Investors should still be attracted to Aritzia despite the earnings dip. The company is still on track for solid earnings growth going forward. Shares of this TSX stock last had a favourable price-to-earnings ratio of 18. The Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Aritzia stock last had an RSI of 29, putting this stock in technically oversold territory.
Here’s an undervalued dividend stock that is perfect for your TFSA today
Telus (TSX:T) is the second TSX stock I’d look to snatch up in a TFSA today. This Vancouver-based company provides a range of telecommunications and information technology products and services in Canada. Shares of this TSX stock have slipped 4.3% over the past month. The stock has plunged 7.4% in the year-to-date period.
In Q1 2023, Telus delivered its strongest quarter on record when it came to total Mobile and Fixed customer growth of 163,000 — up 15,000 compared to the previous year. Moreover, operating revenues climbed 15% year over year to $4.92 billion. Adjusted EBITDA climbed 10% year over year to $1.77 billion.
This TSX stock last had a solid price-to-earnings ratio of 23. Telus last had an RSI of 35, which puts the stock just outside technically oversold levels. TFSA investors can also count on its quarterly dividend of $0.364, which represents a strong 5.9% yield.
Air Canada is a TSX stock that still boasts huge growth potential for your TFSA
Air Canada (TSX:AC) is the third TSX stock I’d target for our TFSA in the second half of July. This Montreal-based company is the largest commercial airliner in Canada. This stock was one of the most explosive growth stocks on the TSX during the 2010s. Its shares have shot up 34% so far in 2023.
This company posted Q1 passenger revenues of $4.08 billion — up 53% compared to the prior year. Moreover, operating revenues climbed 90% to $4.88 billion. Shares of this TSX stock are trading in attractive value territory at the time of this writing. Air Canada looks poised for another big run that could make TFSA investors happy this decade.
