The beauty of the Tax-Free Savings Account (TFSA) is its flexibility. Both short- and long-term savers can largely benefit from maxing out their TFSAs each year.
In 2023, the TFSA contribution limit is $6,500. Don’t worry if you’re behind on your savings, though. Unused contributions can be carried over from year to year.
In addition to tax-free withdrawals, the TFSA allows for a variety of funds to be held within it. Short-term savers may elect for a low-volatile option, such as cash. But those with long-term time horizons would be wise to own funds with a certain amount of growth potential. After all, there’s no need to pay any tax at all on both capital gains and withdrawals.
With that in mind, I’ve put together a basket of three high-potential TSX stocks that are worth a look if you’ve got some contribution room still available in your TFSA.
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Constellation Software
At a stock price of more than $2,500, TFSA investors won’t be able to own too many shares of Constellation Software (TSX: CSU). However, whether you own one share or 100, in the long term, what truly matters is the amount of money you have invested in the stock.
While the tech stock may carry a steep price tag, Constellation Software certainly has a track record of market-beating growth that’s not second to many. Shares are nearing a market-crushing 200% return over the past five years. And with the stock up 25% year to date, Constellation Software has fared far better than many of its Canadian tech peers in 2023.
If you’re in it for the long haul and are looking to add some dependable growth potential to your portfolio, there’s almost never a bad time to load up on this top tech company.
Lightspeed Commerce
On perhaps the other end of the spectrum within the tech sector is beaten-down stock Lightspeed Commerce (TSX: LSPD).
At a market cap of less than $3 billion, its size pales in comparison to Constellation Software’s massive $55 billion market cap.
Lightspeed Commerce is still largely in its early growth days, which, unfortunately, has had no shortage of volatility as of late.
Despite revenue growth continuing to soar at double-digit rates, shares are currently down close to 90% from all-time highs set in late 2021. It’s worth mentioning, though, that the stock did go on a run that topped 1,000% in returns from early 2020 to late 2021. Today, shares are trading at just about the same price as when the company went public in 2019.
If you’re looking to take a chance on a company with serious multi-bagger growth potential, Lightspeed is a solid choice. Just make sure you’re prepared for a bumpy ride.
Brookfield Renewable Partners
The last pick on my list is another TSX stock trading at a bargain price. The renewable sector space as a whole has been on the decline since early 2021, and Brookfield Renewable Partners (TSX: BEP.UN) has certainly felt that.
Excluding dividends, which are yielding a whopping 6% today, Brookfield Renewable Partners stock is down just about 50% from all-time highs. Still, shares have close to doubled the returns of the S&P/TSX Composite Index over the past five years.
The market potential in the growing renewable energy space remains a significant one. And already with an established global presence, I remain firmly bullish on the long-term upside of Brookfield Renewable Partners.
