The S&P/TSX Composite Index has moved lower in the last few weeks after staging a rebound in the first six months of 2023. The ongoing pullback has driven valuations of TSX stocks across sectors lower, providing investors with an opportunity to buy the dip and enjoy outsized gains when market sentiment recovers.
Moreover, capital gains earned in a TFSA (Tax-Free Savings Account) are sheltered from Canada Revenue Agency taxes, making the registered account an ideal one to hold quality growth stocks.
Here are five top TSX stocks that can electrify your TFSA in late 2023.
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Shopify stock
One of the largest tech companies in Canada, Shopify (TSX: SHOP) is also the second largest e-commerce platform in North America. Shopify has onboarded more than two million merchants on its platform, allowing it to end 2022 with $7.5 billion in sales.
Despite macro headwinds, Shopify increased revenue by 30% year over year while gross merchandise sales, or GMV, grew by 17% in Q2. Yes, its top-line growth has decelerated post the COVID-19 pandemic, but it continues to grow at an enviable pace.
The e-commerce platform’s widening revenue will translate to higher profit margins for the company. In fact, Shopify expects free cash flow in Q3 to be higher than cash flows earned in the first six months of 2023.
ATS stock
Valued at $4.7 billion by market cap, ATS (TSX: ATS) provides automation solutions globally. It plans, designs, builds, and services automated manufacturing and assembly systems, which include automation products and test solutions.
Down 26% from all-time highs, ATS stock trades at 17.6 times forward earnings, which is very cheap for a growth stock. Analysts remain bullish on ATS stock and expect it to surge over 45% in the next 12 months.
Docebo stock
A company that provides enterprise-facing e-learning solutions, Docebo (TSX: DCBO) is valued at $1.7 billion by market cap. In Q2 2023, Docebo reported revenue of $43.6 million, an increase of 25% year over year. Its subscription sales were up 28%, accounting for 94% of total sales.
Docebo is on the verge of reporting consistent profits and reported adjusted net income of $4.7 million in Q2, compared to a loss of more than $2 million in the year-ago period. It also ended Q2 with free cash flow of $7 million, indicating a margin of 7%.
Magna International stock
An undervalued large-cap TSX stock, Magna International (TSX: MG) is an auto ancillary company that generated over $50 billion in sales last year. Despite a sluggish macro environment and slowdown in the auto sector, Magna is forecast to increase sales to $62 billion in 2024. Comparatively, analysts forecast adjusted earnings to expand from $5.48 per share in 2022 to $9.06 per share in 2024. So, MG stock is priced at 7.3 times forward earnings, which is very cheap.
Bay Street expects Magna stock to surge over 50% in the next 12 months.
Nuvei stock
The final TSX stock on my list is Nuvei (TSX: NVEI), a company that operates in the fintech space. Valued at $2.6 billion by market cap, Nuvei stock is down 85% from all-time highs. This pullback has increased Nuvei’s dividend yield to almost 3%.
Nuvei is priced at just 6.8 times 2024 earnings, which is very cheap, given its earnings are forecast to grow by more than 20% annually between 2024 and 2028.
Analysts expect NVEI stock to gain 110% in the next 12 months.
