3 Stocks to Help New Investors Build TFSA Wealth

Fairfax Financial Holdings (TSX:FFH) and two other top stock picks for any TFSA.

| More on:
TFSA and coins

Image source: Getty Images

Your TFSA (Tax-Free Savings Account) is a tremendous tool to help you compound wealth over time. Indeed, whenever you can take taxes that chip away at capital gains and dividends out of the equation, you can give your retirement a jolt. Though some may choose to maximize potential gains in their TFSA, with riskier, high-volatility securities, I’d urge most investors to consider maximizing their risk-adjusted returns over time instead.

Indeed, smart investors know it’s all about the risk/reward scenario. Some risks are worth taking if the potential rewards are great. If the rewards and potential risks you’ll bear are high, it may make sense to pass up a name for your TFSA, as it should really be reserved for the stocks you cherish most and wish to hold over extended periods of time.

In this piece, we’ll check out three intriguing Canadian stocks that can help TFSA investors kickstart their retirement funds.

Parkland Fuel

Up first, we have gas station retail firm Parkland Fuel (TSX:PKI), which has recovered considerable ground in recent quarters after falling into a multi-year slump. Year to date, PKI stock is up an impressive 29%. Despite the remarkable run, shares are still more than 22% off their 2020 all-time highs as of writing. Moving ahead, the $6.6 billion retailer looks in a great position to continue its recovery.

For the latest quarter, Parkland Fuel clocked in a mixed quarter that saw earnings per share (EPS) come in at $0.44. That’s shy of the estimate, which called for $0.67. Revenue came in at $7.8 billion. At 19.5 times trailing price to earnings (P/E), with a 3.68% dividend yield, PKI still stands out as a great relative bargain on the TSX.


Loblaw (TSX:L) stock has been consolidating for well over a year now. Indeed, after such a remarkable 2021-22 rally, shares were in need of a breather. As inflation and economic pressures continue to weigh, I think the next major move for L stock is higher.

Though the company has received flack for some of its absurdly priced food items, I still think the firm retains its reputation for offering a solid value proposition. That said, the social media backlash regarding price gouging combined with the impressive 2021 run-up in the stock does not give Loblaw a good look through the eyes of its consumers.

In any case, L stock looks cheap at just 19.4 times trailing P/E, with its 1.49% dividend yield. In the face of recession, I think Loblaw is where you’ll want to be.

Fairfax Financial Holdings

Fairfax Financial Holdings (TSX:FFH) is an insurer and investment holding firm that’s exploded higher over the past year. Undoubtedly, the run can’t last forever, with shares up more than 220% as of writing since its 2020 lows.

That said, the valuation and earnings power, I believe, could propel shares even higher over the next 18 months. The stock trades at just 8.2 times trailing P/E. Impressive underwriting margins have really played a major part in the company’s return to the spotlight. As investments pick up traction, I think it’ll be tough to dethrone the underrated Canadian financial, as it feels the wind to its back for a change.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.

More on Investing

pipe metal texture inside
Dividend Stocks

Enbridge Stock: Buy, Sell, or Hold Today?

Enbridge is up 7% in the past six months. Are more gains on the way?

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Tuesday, May 28

Besides Scotiabank’s earnings, the important U.S. consumer confidence numbers will remain on TSX investors’ radar today.

Read more »

money cash dividends
Dividend Stocks

The 2 Stocks Every Dividend Investor Should Own for Reliable Cash

Dividend stocks offering consistent and reliable returns can be a crucial asset in any portfolio, especially for income-producing dividend portfolios.

Read more »

grow dividends
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX dividend-growth stocks now offer yields above 7%.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold for Tax-Free Gains

Building a large, tax-free nest egg in your TFSA with growth stocks can give you more control over your tax…

Read more »

Group of people network together with connected devices
Tech Stocks

This Is the Best Overlooked AI Stock on the TSX Today

This AI stock has been a top growing in the last while, but remains overlooked despite its strong portfolio and…

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Dividend Stocks

May Boycotts: Is Loblaw Stock in Trouble?

Even extreme fluctuations in consumer purchasing patterns may not impact a stock as aggressively as demoralizing actions like boycotts.

Read more »

Dice engraved with the words buy and sell
Stocks for Beginners

TD Stock: Buy, Sell, or Hold?

TD stock (TSX:TD) is under immense scrutiny during its money laundering probe, but this could also mean it is a…

Read more »