The TFSA (Tax-Free Savings Account) contribution limit has increased to $7,000 in 2024, up from $6,500 in 2023, taking the cumulative contribution room to $95,000 for this registered account.
One of the most popular investment accounts in Canada, the TFSA allows you to hold a variety of asset classes, such as stock, bonds, and mutual funds. Further, any returns generated in the TFSA are exempt from Canada Revenue Agency taxes, making it an ideal account to hold a combination of growth and dividend stocks.
Here’s where you can invest $7,000 in the TFSA next year.
Athabasca Oil stock
Valued at $2.2 billion by market cap, Athabasca Oil (TSX: ATH) has returned over 270% to investors in the past five years, easily outpacing the broader markets. The company is engaged in the exploration, development, and production of light and thermal resource plays in the Western Canadian Sedimentary Basin in Alberta.
Despite its outsized gains, ATH stock is quite cheap and trades at 6.5 times forward earnings. While Athabasca Oil is part of the capital-intensive energy sector, its balance sheet is light on debt, allowing it to generate generous cash flows through an asset base that is long-life and low-decline.
In the third quarter (Q3), Athabasca reported a net loss of $70.2 million. However, its free cash flow more than doubled to $108 million due to an uptick in oil prices.
Analysts remain bullish on ATH stock and expect shares to surge over 30% in the next 12 months.
goeasy stock
A company operating in the financial lending space, goeasy (TSX: GSY) has created massive wealth for shareholders. In the past two decades, the TSX stock has returned a whopping 3,610% to investors after adjusting for dividends. goeasy also offers you a tasty dividend yield of 3.9%.
The lending environment is quite tepid due to rising interest rates and higher inflation. Moreover, interest rate hikes might lead to an uptick in delinquency rates, making goeasy a high-risk investment today.
However, goeasy ended Q3 with $722 million in loan originations, an increase of 13% year over year. The increase in lending was driven by a record volume of credit applications, which grew 30%, leading to record loan originations across the company’s products and acquisition channels.
goeasy ended Q3 with a consumer loan portfolio of $3.43 billion, an increase of 33% year over year, allowing it to increase sales by 23% to $322 million.
Priced at eight times forward earnings, GSY stock trades at a discount of 28% to consensus price target estimates.
Hammond Power Solutions stock
The final TFSA stock on my list is Hammond Power Solutions (TSX: HPS.A), a company that designs, manufactures, and sells various transformers in Canada and other international markets.
Valued at $943 million by market cap, Hammond Power has delivered game-changing returns to shareholders. Since December 2003, HPS stock is up 32,560% after adjusting for dividends.
But its growth story is far from over, as analysts expect sales to rise to $770 million in 2024, up from $558 million in 2022. Its adjusted earnings are forecast to rise from $3.77 per share to $5.46 per share in this period.
Priced at 14.5 times forward earnings, HPS stock is quite cheap, given earnings are forecast to rise by 29% in 2023 and 12.3% in 2024.
